JPM Coin will play an important role in improving confidence towards blockchain
JPMorgan Chase’s in-house stable coin, JPM Coin, is now live and is being used by a major transnational tech firm for round-the-clock cross-border payments. First announced in February 2019, JPM Coin was created with the aim of increasing settlement efficiency — initially within three of its operations.
JPM Coin is real-world proof of how blockchain technology can be used to increase efficiency and reduce costs. The initiative by the banking giant has improved the megabank’s confidence in the promise and profitability of such technology. JPMorgan has created a dedicated business devoted to digital currency and blockchain, and hopes to bring on board further commercial clients for the stable coin.
The new business unit Onyx is being led by Umar Farooq, the leader of JPM’s blockchain efforts. Takis Georgakopoulos, JPMorgan’s global head of wholesale payments, told reporters the upcoming focus for the blockchain unit. “We are shifting to a period of commercialization […] moving from research and development to something that can become a real business,” he explained.
JPM Coin has been launched amid PayPal’s recent embrace of cryptocurrency, leading to a significant boost of confidence in blockchain’s ability to be monetised. JPMorgan has experimented and developed with blockchain in several key areas.
First, the banking giant has been piloting the use of blockchain technology for an Interbank Information Network since 2017. With around 400 participant banks and corporations, the network branded as Liink is aimed at bringing significant efficiency savings for the complex interactions of corresponding banks in cross-border wholesale payments.
Second, the bank has identified the use of blockchain to innovate within the outdated system of processing hundreds and millions of paper checks physically. Georgakopoulos said that a new blockchain system to solve this issue is months from commercial launch.
“Using a version of the blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it’s possible we can save 75% of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days,” he explained.
Lastly, JPMorgan is using blockchain to create new payment rails for global central banks and their evolving central bank digital currencies. The exec pointed at China and Singapore to comment that the probability of CBDC adoption is “very high.”
Umar Farooq, the new CEO of Onyx explained the process of developing the project and the reason the development appears to be “slow.”
Written by Harshini Nag