JP Morgan Chase to create digital coin for faster transactions
Move comes after CEO's dismisal of cryptocurrencies as "fraud"
JP Morgan Chase, the biggest US bank by assets, said it developed a prototype digital coin that its clients will be able to use for instant payment transfers through blockchain technology.
The JPM Coins can be transferred and instantly redeemed for the equivalent amount of US dollars when one client sends money to another over the blockchain network, which speeds up transactions, the bank said in a statement.
"JPM Coin is currently a prototype that will be tested with a small number of JP Morgan’s institutional clients, with plans to expand the pilot programme later this year," Umar Farooq, head of Digital Treasury Services and Blockchain at JP Morgan, said. "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."
The move comes after JP Morgan's chief executive Jamie Dimon famously criticised Bitcoin as "fraud" in 2017 and since then regretted his comments, and said that blockchain had viable uses for the financial industry.
"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," the bank said in its statement.
The bank said it believes the JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.
"As we move towards production we will actively engage our regulators to explain its design and solicit their feedback and any necessary approvals," it said.
The JPM Coin will be issued on Quorum Blockchain, its in-house blockchain technology. The digital coin, which is currently a prototype, will be operable on all standard Blockchain networks.
Updated: February 16, 2019 07:21 PM