Banking giant J.P. Morgan has created its own cryptocurrency to help clients transfer money instantly.
The company’s “JPM coins” will be based on blockchain technology, the same architecture used by the likes of bitcoin and ethereum, facilitating “near-instantaneous” settlements of money transfers, the Financial Times reports.
The virtual coins will also “mitigate” counter-party and settlement risks, the FT notes.
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While the technology is only a prototype in its current state, J.P. Morgan has already successfully used the virtual coin to transfer money “between the bank and a client account”, the BBC says.
An official roll-out of the coin has not yet been revealed. For now, the company will carry out further tests with a small sample of clients over the next few months.
The news comes as a surprise given that Jamie Dimon, the banking giant’s chief executive, has historically opposed cryptocurrencies.
In 2017, Dimon dubbed bitcoin a “fraud” and said that the coin’s fans would “pay the price” if they were “stupid enough” to invest in it, US-based broadcaster CNBC reports.
He changed his tone in early 2018, admitting that he regretted his comments and adding that blockchain technology may have “real” applications in the banking world.
Meanwhile, J.P. Morgan’s chief of digital treasury services and blockchain, Umar Farooq, said in a statement that the bank has “always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated.
“Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counter-party and settlement risk, decreasing capital requirements and enabling instant value transfer,” he said.
How is it different to bitcoin?
Unlike most cryptocurrencies, which are often used by investors as a digital asset, the JPM coin will be pegged to the dollar. Therefore, $1 (£0.78) should equate to a single JPM coin.
There are also a finite number of bitcoin and ethereum tokens available, meaning values skyrocket once most of the virtual coins have been purchased.
This doesn’t seem to be the case with the JPM coin, which will simply be used internally to manage online payments.
Once a J.P. Morgan customer transfers money into a recipient’s account, the funds are “converted into an equivalent number of JPM Coins”, according to the BBC.
“Once the transactions have been performed, holders of JPM Coins can redeem them for US dollars from the bank,” the broadcaster adds.
Can anyone buy JPM coins?
No, JPM coins are not be available on public trading platforms such as Coinbase or eToro.
