February 15, 2019, | AtoZ Markets - JPMorgan Chase a leading global financial services firm and one of the largest banking institutions in the United States, which executive director is well known for his negative comments about bitcoin, recently announced to be the first big U.S. bank with its own cryptocurrency.
JPMorgan Chase negative attitude toward crypto changed?
Two years ago Jamie Dimon (pictured below), the CEO of JPMorgan Chase made interesting statement about Bitcoin, by calling it "fraud." Dimon added then, that any his company employee caught to trade cryptos would be fired due to "stupidity."
Despite such a negative attitude towards the digital assets, the anger of the head of one of the largest US banks seems to have changed to mercy. Numerous news platforms have reported that on Thursday, JPMorgan supposed to become the first major US bank to submit its own digital token for real use. It could be considered as the last step of the Wall Street’s evolving approach to the blockchain technology.
Daimon continues to doubt Bitcoin’s legitimacy, however, he recognizes the blockchain’s potential in the global financial system in the future.
The financial firm has already released Quorum the enterprise-ready distributed ledger and smart contract platform which several companies can use to track their financial data.
With the release of its digital coin, one of the largest U.S. banking institutions expands its experiment and seeks to make the idea of digital currencies more acceptable to their risk-minded corporate clients. The company representatives revealed some details of their upcoming crypto project.
According to the bank officials the development of JPM Coin began last year. Their designed crypto supposed to help large company customers, including large corporations and other banks, to quickly and safely move money. (JPMorgan reports that about 80% of Fortune 500 companies provide banking services.) Umar Farooq, who manages JPMorgan blockchain project, explained in his recent interview that the bank decided to use its cryptocurrency, because "customers needed a way to transfer money to the blockchain"
How new coin will fulfill its purpose?
Now, when the bank customers want to transfer dollars using the bank’s blockchain system, the money in their JPMorgan accounts will be converted into JPM coins, each of which is secured by the U.S. dollar which gives the coins a stable value. Then the token will be able to move almost instantly through the coin register, which will be based on the previously mentioned JPMorgan Quorum blockchain platform. Once the transfers are completed, the coins can be converted back into dollars.
According to Farooq, the main advantage of this new technology is speed. Customers who want to transfer huge amounts of money usually have to do it via bank transfer, a process that can take hours or even days.
With international transfers, changes in currency exchange rates over a long period of time can lead to an increase in customer spending. Farooq noted that JPMorgan's offer would be useful for large clients.
Due to this JPM Coin will not be subject to wild price volatility, which attracts speculators to other cryptocurrencies.
Moreover, the project still only being tested and is not yet available to customers. The version of JPMorgan coin, according to the experts, will be less useful than other similar products, because it will not be possible to bring it beyond the bounds of the company's own systems, at least at the initial stage.
New crypto will not affect global market
Financial experts believe that the bank token is unlikely to shake up the financial system in the near future. Due to the JPMorgan management over their coin, it lacks the fundamental qualities that made cryptocurrencies so widespread and radical: freedom from third parties and regulatory control.
Nevertheless, the entry of a large bank on Wall Street to the cryptocurrency market shows how global digital assets technology began to gain popularity in the traditional financial system one year after the prices of bitcoins and other digital tokens dropped sharply.
New crypto will not affect global market
The bank followed the example of the several small companies which launched similar digital coins tied to the dollar. A consortium of the European banks announced finalizing the development of the Utility Settlement Coin, which will enable faster transfer of money between banks.
Several cryptocurrency exchanges already have their own stable coins.
As a rule, blockchain is used when companies want to transfer data or money between institutions that might otherwise encounter problems when reconciling accounts. Blockchain technology allows multiple computers to store a common set of records. Barclays, Credit Suisse, and several other banks are developing Coin Utility Payments, which uses blockchain technology to simplify the transfer of money between financial institutions.
JPMorgan expressed their hopes in increasing the versatility of their coin. According to the financial corporation officials in near future their crypto usage can be expanded to represent currencies outside the dollar. After testing phase is finished, JPMorgan plans to work with the local financial authorities to get permission for more extensive use of JPM Coin. As the JPMorgan blockchain manager Umar Farooq stated, this process might take several months.
Think we missed something? Let us know in the comments section below.