According to a recent CNBC report, the financial giant is launching "JPM Coin", a bank-backed cryptocurrency that will primarily be used to "instantly settle" transactions between clients in its wholesale payments business.
"We successfully tested the movement of money between a client account and a JP Morgan account using the new technology", Umar Farooq, head of Digital Treasury Services and Blockchain at the bank, explained in a presentation, shared by JP Morgan.
Each JPM Coin is redeemable for a single USA dollar, so its value is unlikely to fluctuate, with business customers provided with the coins after depositing cash at the bank.
The financial service company will begin with a trial period in the next few months, moving a portion of its $6 trillion daily lending by JPM Coin. "So anything that now exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction", Farooq stated.
In an attempt to reposition itself after Jamie Dimon's past controversial comments, Farooq tries to convince us this is part of the master plan: "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". CNBC first reported JPM Coin.
This news might come as a surprise to those who are familiar with JP Morgan's previous views on Bitcoin. This digital token will serve to instantly settle payments between clients. "That way, they can consolidate their money and probably get better rates for it".
"We believe it will be crucial for banks to maintain their market position in payments, because payments are often central to the client relationship, generating substantial revenues from credit and debit card fees, deposit account fees, cross-border transaction fees and net internet income", S&P said.
The third option is perhaps most likely, JPM doesn't have unilateral control of the free market, albeit their dominance is prevalent, it is still likely that this will just create further competition.
JP Morgan is the first USA bank to launch a Cryptocurrency. He has previously labeled bitcoin one of the biggest scams in history.
To use JPM Coins, clients will first have to be approved by regulators and pass money laundering checks to ensure that no illegal activity is being conducted. After going through the payment system, the coins will be destroyed, and the bank will deposit the clients' accounts with the corresponding amount of United States dollars.
JPMorgan said its new coin, which will be issued on its in-house blockchain technology Quorum, was now a prototype.
Businesses traditionally using wires to buy the issuance have seen a time gap between settling the transaction and it being paid for, but they will be able to use the JP Coin for instant payments.