JP Morgan to trial own cryptocurrency ‘JPM Coin’ for instant client payments: Report

Banking giant J.P. Morgan is reportedly launching its own cryptocurrency in a bid to transform the payments business.

According to a report from CNBC, the bank has developed “JPM Coin” to facilitate instant settlement of payments between clients of its wholesale payments business. The trials are set to begin in a few months and will initially involve only a small fraction of payments.

The project marks the first cryptocurrency developed by a major U.S.-based bank. Similar to stablecoins (fiat pegged digital tokens), each JPM Coin would be redeemable for a U.S. dollar.

Once clients deposit dollars at the bank, they will be issued JPM Coins. After they use the coins for making a payment or security purchase on the blockchain, the bank will destroy the coins and give clients a proportionate amount in dollars.

Umar Farooq, head of J.P. Morgan's blockchain projects, has identified three early applications for the JPM Coin – international payments for large corporate clients, securities transactions, and large corporations who use the bank’s treasury services to replace their dollar holdings in subsidiaries around the world.

"So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction," he said. "The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this."

The bank also hopes that the first-mover status, along with its large market share in corporate payments, will result in good adoption of this new coin.

"Pretty much every big corporation is our client, and most of the major banks in the world are, too," Farooq said. "Even if this was limited to JPM clients at the institutional level, it shouldn't hold us back."