In the corporate world, especially when it comes to the financial industry, JPMorgan Chase is among the hardest crisis of the digital currencies. Here bitcoin, in particular, has often been under fire from the company’s officials, including Jamie Dimon. Over a previous couple of years, the institution has positioned itself as one of the true hardline deniers of any value in cryptocurrencies that are decentralized and not under the regulation of official national agencies.
Yet, right now, the same financial firm is well into the development of the JPM Coin. This is a dedicated cryptocurrency that the company plans to use with its numerous corporate clients and partners. For many in the crypto community, the level of irony in that development is immeasurable, but for others, it only showcases the point that blockchain tech is something that few if any financial institutions will be able to ignore.
Start of Trials
A report that appeared in Bloomberg Japan on Tuesday stated that Umar Farooq, who is the head of digital treasury services and blockchain of the investment bank, said that the trials of the tech will soon begin. They will be conducted with the aim of providing a way to speed up transactions. These include the payments between different firms as well as bond transactions.
However, the report noted that the trials will begin using the assumption that the needed regulatory permissions will be granted at some future point. All this shows that the bank is locked and loaded for its first test of this type. It also shows that JPMorgan Chase is not seeking a limited testing process.
Instead, it wants to undergo big tests, presumably including stress-based ones in the near future and with real clients. The same points to the possibility of JPM Coin being ready for actual widespread use in the real world immediately after.
JPM Coin Technology
The initiative was first revealed back in February 2019. It was stated back then that the token will run on top of the Quorum blockchain network, which is a version of the ethereum network. However, unlike the actual ETH tokens, this network is private and developed by the bank.
This is not going to be a big issue for anyone, being that the fintech is only expected, like esports platform and many other digital ventures, to work and not to be original in its design. Otherwise, the token will function as a stablecoin. The setup for using and acquiring it will include depositing the fiat currency in the bank and getting the token, which will be then transferable using the distributed ledger of the Quorum network.
Later on, the recipient of the tokens, anywhere in the world, will be able to exchange the tokens back into the cash in any JPMorgan bank. In the beginning, the coin will be linked exclusively to the USD, but there are plans, like with Facebook Libra, to extend the same connection to other fiat currencies.
Currently, the organization believes that the real-world trials will begin in a couple of months. This means that the bank is trying to find a way to launch the first trial somewhere between the end of summer and the end of 2019.
Farooq stated, in an interview with Bloomberg that the JPM Coin is going well. He, in particular, praised the technology, which most likely means the Quorum blockchain, but also said that further time is needed for non-tech issues. These include phases like approval and licensing, which will not come quickly, but the company also hopes they will not end in the quagmire that many crypto-only ventures experience.
At first, the coin will be used as a means of inter-firm remittance, which should expand to the settlement of bond and commodities transactions. Farooq said that numerous clients in Europe, Japan, and the US have already expressed a lot of interest. However, completely expectedly, he was hesitant to name any actual companies that have shown a willingness to use the JPMorgan Coin.
Following the Money
The entire process of developing this coin is firmly rooted in the company’s desire to follow the money, which is in this case steadily pointing towards blockchain for some time. Sure, the company might be hostile to cryptocurrencies, which are in many ways a direct competitor to both them and the entire traditional system, but the tech is more than appealing.
This was a conundrum that was weighing heavily on the minds of many in the banking and finance system, but now there is an apparent solution – using the basis of the tech to create their own centralized and controlled blockchain system. This was more costly and labor intensive than, for example, simply using ETH token for JPMorgan Coin, but the dependencies were too much for the bank.
Instead, it went along a costlier and longer journey that allowed it to have its own system that basically provides everything that the ethereum network could do in terms of tech abilities. Even if the potential is smaller for Quorum, which it likely is, the bank will have a simple mantra – it does not have to be the best, only good enough.
JPMorgan continues to go at great lengths to avoid any association with bitcoin, even though BTC is used for gambling, online loans, remittance and almost anything else like regular currency.
Still, the battle lines continue to be fixed in this sense, as neither the cryptocurrency network nor the traditional financial system ready to make a step towards the other side. But, no matter how much the banks want to avoid it, there is no doubt that developments like this do offer validity to the crypto domain.
Moments like this make it hard for banks to say that cryptocurrencies are dangerous and wrong, while they are directly developing the same financial mechanisms, only centralized. For many people who are on the fence about crypto, this will be a clear sign towards the new tech. With enough of similar singles, the crypto adoption rates will continue to grow as well.