J.P. Morgan Chase has announced that they will create a cryptocurrency JPM Coin to be used on their site. The news itself doesn’t seem all that important. That is, until you consider how strongly J.P. Morgan Chase Chairman and CEO Jamie Dimon felt against cryptocurrencies. Most notably, he has spoken out against the largest cryptocurrency: Bitcoin.
In January 2014 Dimon remarked that Bitcoin is “a terrible store of value.”
Additionally, in November 2015 he said Bitcoin wouldn’t survive.
Furthermore, the financial mogul was quite vocal about Bitcoin in 2017. Dimon called Bitcoin a “fraud” and it “won’t end well.” Referring to any employees caught trading Bitcoin, he stated, “I would fire them in a second, for two reasons: It is against our rules and they are stupid, and both are dangerous.” He later publicly quipped about his “formerly smart daughter” when she informed him about her 2 Bitcoin.
Dimon spoke very little about Bitcoin, and cryptocurrencies in general, for much of 2018, but when he broke his silence it was to call Bitcoin a “scam.” Bloomberg reported that Dimon further “suggested governments may move to shut down the [crypto]currencies, because of an inability to control them.”
Although Dimon obviously does not believe in the functionality of cryptocurrencies, he does advocate for their underlying blockchain technology. Dimon has said, “The blockchain is a technology which is a good technology. We actually use it. It will be useful in a lot of different things. God bless the blockchain.”
In fact, J.P. Morgan developed its own permissioned distributed ledger blockchain called Quorum on the Ethereum network. Perhaps Dimon doesn’t have an issue with the Ethereum cryptocurrency as J.P. Morgan co-founded a consortium project, called Enterprise Ethereum Alliance, aimed at supporting Ethereum blockchain development.
Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.
J.P. Morgan Chase
JPM Coin does not fit the current definition of a cryptocurrency as we presently understand it, but it will be utilizing aspects of blockchain technology. Quorum is the platform JPM Coin will initially be released on, but will eventually extend to other ledgers. Despite being a private token for J.P. Morgan customers, JPM Coin is expected to operate on all standard blockchain networks. JPM Coin will always hold a value of $1 USD, backed by actual fiat currency stored in J.P. Morgan accounts.
J.P. Morgan partnered with Royal Bank of Canada and Australia and New Zealand Banking group to establish Interbank Information Network (IIN), another blockchain consortium project. IIN’s goal is to offer faster service than the traditional Swift interbank messaging system. J.P. Morgan Chase announced that they expect to see transaction times reduced “from weeks to hours” utilizing JPM Coin compared to the current global payment verification process.
Umar Farooq, J.P. Morgan Chase’s head of Digital Treasury Services and Blockchain, has described three internal applications for JPM Coin: replace wire transfers for international payments, provide instant settlement securities issuances, and replace US dollars held by subsidiaries of major corporations using J.P. Morgan’s treasury services.
You can read J.P. Morgan’s FAQ about this coin here. We’re looking forward to seeing how this token evolves and grows in application.
J.P. Morgan image via Shutterstock.