JP Morgan Chase, the largest banking conglomerate, becomes the first US bank to create a cryptocurrency for instant transactions with large payments, according to CNBC .
Every day, major financial institutions around the world transfer over $ 6 trillion. In the next few months, JP Morgan will conduct test tests of the JPM Coin digital token developed by the engineering service of the bank, which allows for real-time settlements between customers.
The head of the blockchain project of JP Morgan Umar Farouk sees three main uses of the token:
- International payments . Large corporations transfer millions of dollars every day using bank transfers on the SWIFT network, which usually take several days, and using a token you can do almost instant calculations.
- Securities Transactions – Farooq claims that JP Morgan created a deposit certificate on the blockchain of $ 150 million for a Canadian bank.
- Replacing dollars held in treasury bills . Token can replace the dollars owned by subsidiaries of huge corporations around the world.
Thus, the bank is preparing for the future, when all financial assets will switch to the use of blockchain technology . The first step will be the introduction of instant payments, which can significantly increase the speed of transactions compared to the existing electronic payment system.
Umar Farouk, stated :
“All assets existing in the world will somehow go to the blockchain. The possibilities of technology are endless. ”
New currency JP Morgan can significantly affect and even transform the traditional financial system. Making payments using JPM Coin will be one of the first real banking transactions using cryptocurrency. Traditional banks do not use digital currencies as risky assets. JP Morgan itself last year banned the purchase of cryptocurrencies using a bank credit card.
However, JPM Coin banking will most likely not be available to retail investors, the token can be used only by institutional clients of JP Morgan, such as corporations, banks and brokers-dealers.
Each JPM coin is exchangeable for one US dollar, so its value should not fluctuate. The bank uses the concept of the now popular steblecoins . The client receives JPM Coin after depositing dollars into the account. After withdrawing dollars from the account tokens are destroyed.
The advantage of JPM Coin transactions over the SWIFT transfer system is their instant execution. Another advantage of a banking token will be operations with securities. JP Morgan has already used the blockchain to create a virtual simulation of a $ 150 million deposit certificate for a Canadian bank.
According to Farouk, JPM Coin will be used by large corporations receiving JP Morgan treasury services to replace the dollars they hold in subsidiaries around the world. This business is unknown to ordinary investors, but in 2018, the bank brought $ 9 billion in revenue.
“Almost every large corporation is our client and most of the major banks in the world also. Even if the use of JPM Coin will be limited to institutional-level JPM clients, this should not stop us , ”said Farouk.
Publication date 15.02.2019
Share this material on social networks and leave your opinion in the comments below.
