JPMorgan Chase, the largest US bank by the asset, is probably the next to enter the cryptocurrency era. According to CNBC, the bank is planning to launch its own digital coin, supposedly termed as ‘JPM coin’ in the next few months. Should the plan succeed, cryptocurrencies will get a new momentum in the market. The bank customers will be issued the cryptocurrency on depositing money that they will be able to use during any transaction with the other bank clients over the network.

The bank intends to use a blockchain technology that will allow the instant transfer of payments of JPM coins. Financial experts of JPM believe that the new system will add speed to the existing fund transfer protocol. The value of JPM coin will be set against the US dollar, so we can expect relative stability of the new digital currency. The bank claims that when money transfer occurs to cover the blockchain network, JPM coins can be instantaneously redeemed for the equivalent amount of USD, and this way the settlement time is significantly reduced.

Umar Farooq, head of Digital Treasury Services and Blockchain, JP Morgan has stated that the JPM coin is not actually a form of money. Rather it is a digital currency representing US dollar held in a designated account that can be used with blockchain technology. In an official note, JP Morgan made its stance over the new crypto- they always believed in the potential of blockchain tech and they have support for cryptocurrencies as long as they are properly regulated.

Being a globally regulated bank, they want to take the opportunity to build the capacity in a responsible manner with the oversight of their regulators. They are hopeful about making the best out of JPM coin at the blockchain platform by decreasing clients’ counterparty and settlement risk, reducing liquidity requirements and establishing a fast transaction system.

Is JPM coin a real cryptocurrency?

Although JPMorgan slanged bitcoin as a fraud in the recent past, they made a U-turn in this February. Not only they are going to allow their customers to settle payment with the new coin, international payments or corporate debt issuance services are also being planned to put on the blockchain. The ultimate objective is to make transactions fast and secured. However many people have already raised a question- is JPM coin a real cryptocurrency?

As each JPM coin is redeemable for one US dollar, it is not as volatile as bitcoin or similar cryptocurrencies. On the other hand, JPMorgan has clearly stated that the new currency is not what we call stablecoin. The new currency is likely to be used for cross-border payments and even securities transactions for big firms that utilize JPMorgan’s’ treasury services.

So, can we call JPM coin just a digital currency, as opposed to crypto? If the coin is workable on only JPMorgan’s network and used for fund transfers between the clients, it will be worthless on a public network. That means JPM coins cannot be used in the same way that we do with bitcoin or ethereum.

Cryptocurrencies work on the principle that they would operate on public networks and anyone can enter the network without permission. But in case of JPM coin, the blockchain network will be known as Quorum that only permitted users can access. It is the same difference between the internet and AOL.

While internet users can create a website or blog by connecting a server to the network without seeking permission from anybody, AOL users need to have the permission of the company to publish something on their network.
Some experts argue that JPM coin will mimic fiat currency. So it does not need the help of blockchain. There speculation that JPM coin already exists and it is simply a JPMorgan asset by another name!

Then what is the need for a cryptocurrency name if it is only an internal payment system? – to draw attention? Whatever the reason is, JPMorgan’s current attitude is outright opposite to their CEO’s earlier statement about cryptocurrencies. Maybe the current cryptocurrency platform is more favorable for banking business.