Behold, a major financial institution has issued its own crypto coin…
Of all the banks out there, it had to be J.P. Morgan, the bank that publicly criticized the crypto movement whilst consistently stating that blockchain holds great promise. To sum up the move, J.P. Morgan has announced that it is rolling out the first cryptocurrency by a US bank to transform the payments business. The newly dubbed 'JPM Coin' is a digital token that will be used to instantly settle transactions between clients of its wholesale payments business.
Unlike the Bitcoin and many other cryptocurrencies which are built under the ethos of transparency but also broad-based inclusion, the JPM Coin will only be reserved for big institutional clients of J.P. Morgan that have undergone regulatory checks, like corporations, banks and broker-dealers.
Before the Bitcoin-inspired Lamborghini dreamers get busy planning to splash the digital cash, consider potential implications. Ripple (XRP) has been working on a solution to displace SWIFT’s dominance for many months, and Bitcoin was supposed to open up cross-border transactions in a new, streamlined and cost-efficient way; and now along comes Jamie Dimon with a JPM Coin. The solution presented by the bank offers all of the above and more. While the main street is unlikely to see any benefits, there is huge potential to achieve significant cost reductions by the bank which will ultimately go to benefit the shareholders, including the visionary that is Jamie Dimon.
So, does this spell the end to the big Bitcoin dream and, more importantly, does it put a major roadblock for the likes of Ripple (XRP) who have been trying to disrupt the behemoth financial ecosystem?
It certainly creates even more competition and challenges for the unregulated disrupters out there. However, the move by the bank also shows that there is real life use-case for cryptocurrency and blockchain. As such, smart contract platforms, together with interoperability projects, stand to gain the most from the latest development. Stablecoins risk getting subjected to a renewed round of scrutiny, especially Tether – worth keeping an eye on the Tether premium – which can be monitored here.
Thank you for reading,The BeQuant Analytics team