JP Morgan becomes first US bank to create cryptocurrency for payments business
US investment bank, JP Morgan Chase, has become the first US bank to offer its own cryptocurrency, according to CNBC reports.
The New York-based bank moves more than $6trn around the world every day for corporations through its wholesale payment businesses.
Therefore, JP Morgan Chase imagines that the cryptocurrency could help to reduce risk and enable instant transfers
The cryptocurrency, called “JPM Coin”, will be tied to the US dollar in a bid to make it more financially stable than other cryptocurrencies. In short, a JPM coin will always have a value equivalent to one US dollar.
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Running on blockchain technology, the cryptocurrency will be initially used internally between JPMorgan Chase's wholesale business clients.
“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,” Umar Farooq, head of Digital Treasury Services and Blockchain, said in a statement
Over time, JPM Coin will also be extended to other major currencies.
The bank has already successfully tested the technology by moving money between a client account and a JP Morgan Chase account.
“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,” Farooq added.
“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.”
JPM coin is designed for businesses-to-business money movement flows.
The bank said it doesn’t have plans to make the technology available to individuals at this stage.
It’s not the first time JP Morgan Chase has invested in cryptocurrency or blockchain: last year, the investment bank built an Ethereum-based blockchain platform for business customers.