“The first cryptocurrency created by a major U.S. bank is here — and it’s from J.P. Morgan Chase.The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called “JPM Coin,” the digital token created by engineers at the New York-based bank to instantly settle payments between clients. J.P. Morgan is preparing for a future in which parts of the essential underpinning of global capitalism… move to the blockchain…But in order for that future to happen, the bank needed a way to transfer money at the dizzying speed that those smart contracts closed, rather than relying on old technology like wire transfers…When the international payments are tested, it will be one of the first real-world applications for a cryptocurrency in banking…Though holders of digital currencies may seize on the news that a major financial institution is issuing its own crypto as bullish for the asset class, retail investors will probably never get to own a JPM Coin. Unlike bitcoin, only big institutional clients of J.P. Morgan that have undergone regulatory checks, like corporations, banks and broker-dealers can use the tokens…Each JPM Coin is redeemable for a single U.S. dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins. Clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars…There are three early applications for the JPM Coin…The first is for international payments for large corporate clients…The second is for securities transactions…The final use would be for huge corporations that use J.P Morgan’s treasury services business to replace the dollars they hold in subsidiaries across the world…Looking further out, the JPM Coin could be used for payments on internet-connected devices if that use for blockchain catches on…J.P Morgan is betting that its first-mover status and large market share in corporate payments — it banks 80 percent of the companies in the Fortune 500 — will give its technology a good chance of getting adopted, even if other banks create their own coins.”
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