Umar Farooq, Head of Blockchain Initiatives, Corp. and Investment Bank

J.P. Morgan has announced the creation of a digital coin(named JPM Coin) representing a fiat currency and has become the first US bank to test and create a digital currency.

According to Umar Farooq, head of Digital Treasury Services and Blockchain, the JPM digital coin is designed for instant payments using blockchain technology. It is to be issued on Quorum Blockchain and subsequently extended to other platforms and will be operable on all standard Blockchain networks.

“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. 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. 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.”

In regards to the similarities and difference between JPM Coin and other cryptocurrencies, the JPM coin is redeemable in fiat currency ( held by JP Morgan) and only institutional customers passing JP morgan KYC will be able to transact using the coins.

Even though the coin is still in its prototype phase, the coin will be tested with a small number of J.P. Morgan’s institutional clients, with plans to expand the pilot program later in 2019.JPM Coin is currently designed for business-to-business money movement flows.

Looking further out, the JPM Coin could be used for payments on internet-connected devices if that use for blockchain catches on, Farooq said.

Interestingly, although JP Morgan has announced the creation of its digital currency,  two years ago Jamie Dimon, (CEO of JPMorgan Chase), had explicitly expressed his skepticism about Bitcoin.

by Megha Bhattacharya
Market Analyst at IBS Intelligence