The first crypto created by a major bank in the United States is here and it is an offering from J.P. Morgan Chase. The company is reportedly preparing for a future where parts of the underpinning of global capitalism, through cross-border payments to the issuance of corporate debt, move to the Blockchain initiative. That is the database tech that was made famous by Bitcoin (BTC) its first application. For that future to come to pass, and the bank needs a way to move funds at quick speed that smart contracts closed, instead of relying on outdated technology like wire transfers.
Bitcoin (BTC) Price Today – BTC / USD
JP Morgan’s New Technology Unexpected
For many in the cryptocurrency space, J.P. Morgan’s new token may seem like an unexpected development for an offering that came into existence from the wreckage of the global financial crisis and was expected to disrupt the banking world at some point.
When the global payments are tested with the new technology, it will become one of the first actual applications for a digital currency in the banking sector. The industry has shunned the asset class as a risky endeavor. Last year, J.P. Morgan and two lenders had to ban the purchase of Bitcoin (BTC) by credit card customers. Goldman Sachs shelved its plans to make a Bitcoin (BTC) trading desk after contemplating the idea.
JP Morgan’s CEO Bashed Bitcoin (BTC)
Though holders of digital assets may frown at the news that a major US financial institution is issuing its crypto. Retail investors may never own a JPM Coin. Unlike the Bitcoin (BTC) only big institutional clients of the banking giant have undergone regulatory checks, including corporations, banks and broker-dealers can utilize the token.
Each JP Morgan Coin is redeemable for one USD. Which is why its value should not fluctuate. Clients will be offered the coins after depositing USD at the bank; after using the JPM tokens for a payment or purchase of securities on the Blockchain, the bank destroys the tokens and gives clients a commensurate sum of USD.
Three Early Applications for New JPM Coin
The first application for the new token is the international payments for big corporate clients, which currently happens via wire transfers between financial startups on networks like Swift. Instead of occasionally taking over a day to settle because these institutions also have cut-off times for their transactions and countries also operate on different systems, hence the payments will be settled at any time of the day.
The second is application is for securities transactions. Back in April of 2018, J.P. Morgan Chase tested a debt issuance on Blockchain, by creating a virtual simulation of a $150 million deposit certificate for a Canadian bank. Instead of depending on wires to purchase the issuance resulting in a gap in time between settling transactions and being paid for them, institutional investors can use J.P. Morgan’s token, for instant settlements.
The final real-world application is for huge corporations that utilize J.P Morgan’s treasury services to replace the USD they hold in subsidiaries internationally. Unseen by retail consumers, the business handles a huge portion of the world’s regulated fund flows for startups like Honeywell International to Facebook. Transferring USD for employee and supplier payments.