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JP Morgan’s Newly-Created JPM Coin Sparks Ambivalent Feelings Within Crypto Community

Originally published on: CoinSpeaker
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February 15, 2019

Photo: Håkan Dahlström / Flickr

Photo: Håkan Dahlström / Flickr

On Valintine’s Day, Wall Street giant JP Morgan launched its cryptocurrency dubbed JPM Coin. The developers were expecting a positive reaction and standing ovation from the public, however, the response of the community turned out to be quite ambiguous. Some have met the coin with enthusiasm, while others responded with disgust.

What is JPM Coin?

JPM Coin is a digital token which will be used by the banking behemoth to instantly settle transaction between the clients of its wholesale payments business. Based on blockchain-based technology, JPM Coin enables the instantaneous transfer of payments between institutional accounts. It is issued on Quorum Blockchain, an enterprise iteration of the Ethereum blockchain, and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks.

The announcement by the company states:

“JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.”

The coin provides real-time gross settlement (RTGS). Rather than waiting two days for payments to clear, network participants can transfer tokenized fiat instantly, confidentially, and with full finality. The process of its work is as follows: firstly, a J.P. Morgan client commits deposits to a designated account and receives an equivalent number of JPM Coins. Secondly, these JPM Coins are used for transactions over a blockchain network with other J.P. Morgan clients (e.g., money movement, payments in securities transactions). Finally, holders of JPM Coins redeem them for USD at J.P. Morgan.

Umar Farooq, head of Digital Treasury Services and Blockchain, said:

“The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar.”

Launching the new currency, JP Morgan became the first U.S. bank to create and successfully test a digital coin representing a fiat currency, US dollar. However, in the future, JPM Coin is expected to be extended to other major currencies.

Currently, JPM Coin is tested with a small number of J.P. Morgan’s institutional clients, but later this year, the pilot program will be expanded. Designed at the moment for business-to-business money movement flows, JPM Coin may become available to individuals later. As the company said, the cost-savings and efficiency benefits would extend to the end customers of their institutional clients.

JPM Coin’s Impact On Major Cryptos

As the payment flow of JPM Coin demonstrates several of Ethereum’s core benefits for the finance and banking industry, some are afraid of the impact the newly-created currency may have on other coins, including Bitcoin, XRP, and others, and the crypto market in general.

A well-known crypto investor WhalePanda believes that the JP Morgan announcement is “long term a positive thing for Bitcoin,” but he joked about how Ripple investors would “scream in agony.”

Some wonder why Ethereum, not XRP has been used by JP Morgan. Crypto trader Alex Kruger stated:

“This JPM Coin is the first big public step taken by one of the major banks against Ripple’s ambitions.”

The new coin has some differences from a traditional cryptocurrency, which adds to its benefits and makes this initiative even a more significant step for JP Morgan.

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