In an ironic twist JP Morgan has announced that it will launch a cryptocurrency tied to the US dollar. The coin will be called the JPM Coin and it will be used to make instantaneous payments using blockchain technology.
JPMorgan CEO Jamie Dimon in 2017 called bitcoin a fraud
Dimon later said he regretted his comments. Now JP Morgan has become the first major bank to have its own cryptocurrency. The bank said that it had created and successfully tested the cryptocurrency this month. So after becoming well known for his criticism of the foremost cryptocoin bitcoin Dimon now is CEO of the bank that has set a precedent for creating its own cryptocurrency.
JPM Coin will be a stable coin
Wikipedia describes a stable coin as follows: "Stablecoins are cryptocurrencies designed to minimize the effects of price volatility. To minimize volatility the value of a stablecoin can be pegged to a currency, or to exchange traded commodities (such as precious metals or industrial metals)."
The JPM coin's value is tied to the US dollar. Tether is an existing cryptocoin that is also tied to the US dollar. Its value stays close to the price of the dollar.
How the system will work
Umar Farooq, JP Morgan's head of Digital Treasury Services and Blockchain, says: "When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time."
The bank claimed that over time JPM Coin would be extended to other major currencies. When asked whether regulators would support the coin, the bank said that JPM Coin was a prototype at present. As it moves towards actual production the bank said it would actively work with regulators to get their feedback and receive any necessary approvals,
JP Morgan's official stance on cryptocurrencies
In its release, the bank included its official stance on currencies, one that contrasts with CEO Dimon's 2017 statements: "We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated."
Again there is a certain irony in their statement
JP Morgan report downplays benefits of blockchain technology
The report released just in January showed skepticism on some areas where many think the blockchain could improve current processes. The report claimed that the blockchain is unlikely to re-invent the global payments system but can only provide marginal improvements to various parts of the process. However, the report did admit that the blockchain would streamline and automate such cumbersome processes as trade financing.
In spite of its skepticism at times, the bank has been interested in the potential of blockchain technology back as far as 2015 and joined a group of banks interested in creating standards and protocols respecting the use of the blockchain in banking. However, it left the group less than two years later. However, in 2016 the company began a project in partnership with Digital Asset Holdings indicating they were still interested in block chain technology.
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