Kimberly White/Getty Images
- In a first for a major US bank, JPMorgan said on Thursday it would launch a cryptocurrency tied to the US dollar.
- The bank said the coin, called the “JPM Coin” is intended to “make instantaneous payments using blockchain technology.”
- JPMorgan’s chief executive officer, Jamie Dimon, said in late 2017 that bitcoin, the largest cryptocurrency, was a “fraud.” He later regretted the comments.
- CNBC first reported the bank’s announcement.
JPMorgan, the largest bank in the US, said on Thursday that it had created and successfully tested a cryptocurrency this month. It marked an unprecedented move for a major US bank.
The bank said its digital currency, called “JPM Coin,” is based on blockchain technology and is intended to enable the “instantaneous transfer of payments between institutional accounts.” CNBC first reported the bank’s announcement.
JPMorgan said each JPM Coin has a value equivalent to one US dollar; digital currencies tied to fiat currencies have come to be known as “stable coins.”
“When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time,” Umar Farooq, the firm’s head of Digital Treasury Services and Blockchain, said in a release.
The bank said that over time, JPM Coin will be “extended to other major currencies.” As for whether regulators support the coin, the bank said the cryptocurrency is “currently a prototype,” and as it moves toward production the firm will “actively engage our regulators to explain its design and solicit their feedback and any necessary approvals.”
Sign up here for our weekly newsletter Wall Street Insider, a behind-the-scenes look at the stories dominating banking, business, and big deals.
Jamie Dimon, the bank’s CEO, said in late 2017 that bitcoin, the largest cryptocurrency, was a “fraud.” Months later he said that he regretted the comments, but said he still wasn’t interested in bitcoin itself.
The bank included its official stance on cryptocurrencies in its Thursday release: “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.”
Ironically, the bank recently published a recent report downplaying some of the benefits blockchain technology could bring to the industry. In January, JPMorgan offered skepticism on some areas blockchain could improve current processes.
“Blockchain is unlikely to re-invent the global payments system, but instead can provide marginal improvements to various parts of the process,” the report said.
The report did, however, explain the use cases it saw in streamlining and automating cumbersome banking processes, such as trade finance.
JPMorgan has long shown interest in the potential of blockchain technology. In 2015 it joined a consortium of banks led by New York-based fintech R3 looking to create standards and protocols around how the blockchain could be used in banking. The relationship was short lived, though, as JPMorgan left the group less than two years later.
That wasn’t the end of JPMorgan’s involvement in industry-led initiatives around the new technology. In 2016 the bank invested and began a trial project with blockchain company Digital Asset Holdings, which was led by former JPMorgan executive Blythe Masters before she stepped down at the end of 2018.
In March 2018, the Financial Times reported that JPMorgan was considering spinning off Quorum, it’s internal blockchain project and the one the JPM Coin will be issued on, in an effort to achieve greater industry adoption.