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JPMorgan Becomes First U.S. Bank to Issue its Own Cryptocurrency
FinTech, Blockchain, Financial Services
Of all the financial institutions one might guess would become the first U.S. bank to issue its own digital coin, it’s safe to assume that JPMorgan Chase would not be the first choice.
After all, CEO Jamie Dimon has famously called bitcoin “a fraud” and then doubled down on his criticisms by declaring “these crypto things are kind of a novelty,” while dismissing the whole market as “creating something out of nothing that to me is worth nothing.” However, despite his criticisms of bitcoin, Dimon has always maintained his support for blockchain technology, telling Fox Business in an interview last year that he believed “blockchain is real.”
But when JPMorgan announced on Thursday that it had rolled out JPM Coin, backed by a dollar in JPMorgan accounts, it seemed to be a dramatic shift away from Dimon’s earlier dismissals of cryptocurrencies.
“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,” Umar Farooq, head of Digital Treasury Services and Blockchain at JPMorgan said in a statement. “As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators. 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.”
While the JPM Coin is currently only backed by the U.S. dollar, the bank said in a statement that it would eventually extend to other currencies. It describes its cryptocurrency as “a digital coin designed to make instantaneous payments using blockchain technology.”The JPM Coin is right now “a prototype that will be tested with a small number of J.P. Morgan’s institutional clients, with plans to expand the pilot program later this year.”
“JPM Coin is currently designed for business-to-business money movement flows, and because we are still in a testing phase, we don’t have plans to make this available to individuals at this stage,” Farooq said. “That said, the cost-savings and efficiency benefits would extend to the end customers of our institutional clients.”
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