JPMorgan Chase Moves to Be First Big U.S. Bank With Its Own Cryptocurrency - The New York Times
In 2017, Jamie Dimon, JPMorgan Chase’s chief executive, declared Bitcoin a “fraud” and said that any employee caught trading it would be fired for being “stupid.”
On Thursday, JPMorgan became the first major United States bank to introduce its own digital token for real-world use, the latest step in Wall Street’s evolving approach to the blockchain technology that underpins cryptocurrencies like Bitcoin and Ether.
Despite questioning Bitcoin’s legitimacy, Mr. Dimon has said he recognizes blockchain’s potential in the future of the global financial system. And JPMorgan has already released a blockchain platform, Quorum, that several institutions are using to keep track of financial data.
The bank’s token is unlikely to shake up the financial system anytime soon. Because it will be run by JPMorgan, it lacks the fundamental qualities that have made cryptocurrencies so radical: the freedom from middlemen and from regulatory oversight.
JPMorgan will control the JPM Coin ledger, and each coin will be backed by a dollar in JPMorgan accounts, giving the coins a stable value. That means JPM Coin will not be subject to the wild price volatility that has drawn speculators to other cryptocurrencies.
The bank is following in the footsteps of several smaller players that have introduced similar digital coins tied to the dollar. A consortium of European banks has been finalizing a similar product, Utility Settlement Coin, that would make it possible to move money between banks more quickly. Several cryptocurrency exchanges already have their own so-called stablecoins.
The advantage of such a token, Mr. Farooq said, is speed. Clients that want to move huge sums of money would traditionally need to do so via wire transfer, a process that could take hours or even days. With international transfers, changes in currency exchange rates during the long lag times could end up adding to customers’ costs.
Mr. Farooq said JPMorgan’s offering would be useful for big clients, but not for the smaller speculators who have typically taken an interest in cryptocurrencies.
“This is designed specifically for institutional use cases on blockchain,” he said. “It’s not created to be for public investment.”
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