James Dimon, Chairman and Chief Executive Officer, JPMorgan Chase. Photo: World Economic Forum via Wiki Commons).
Cryptocurrencies,  Tether

JPMorgan Chase jumps into stablecoin game with its own cryptocurrency

The JPM Coin will be used to settle international corporate transactions faster and cheaper than is currently possible

JPMorgan Chase is doubling down on its bet on blockchain technology by launching a cryptocurrency of its own, the JPM Coin.

The JPM Coin, which will be valued at par with the U.S. dollar, will initially be used to settle three types of financial transactions virtually instantaneously, said Umar Farooq, who leads JPMorgan’s blockchain projects, to CNBC on Thursday. These are international payments between large corporations, the buying and selling securities by large institutional investors, and to cover large corporations’ day-to-day payments.

“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” Farooq said on . “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”

Taking shots at rival stablecoins—specifically, Tether and Coinbase’s USD Coin—JPMorgan promised that only “Permissioned (i.e., enterprise grade secure blockchain solutions built by J.P. Morgan and/or partners)” and “Only institutional customers passing J.P. Morgan KYC [“know your customer” checks] can transact with these coins.” With a little over 2 billion tokens floating in the market, Tether remains the dominant stablecoin, though questions about its transparency and reserve assets have plagued the crypto markets for nearly two years.

While the banking giant’s CEO, Jamie Dimon, has been an aggressive attacker of Bitcoin, calling it a “fraud,” he has also been an open advocate of the potential of the distributed ledger technology that underpins blockchain.

JPMorgan is one of the leaders in introducing blockchain technology into the financial markets with its enterprise Ethereum-based Quorum platform. The permissioned technology’s first major use was the Interbank Information Network (IIN), which seeks to slash the time and cost of settling financial transactions — essentially transferring funds internationally between banks in seconds rather than the hours or even days required under the current SWIFT system.

In April, IIN was used to simulate a $150 million offering of certificates of deposit by the National Bank of Canada.

The bank’s wholesale payments business moves $6 trillion around the world every day on behalf of corporate clients. Trials will soon begin moving a very small portion of that to the JPM Coin.

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.