JP Morgan first bank to issue USD-backed digital currency

The chase is on for JPM

Singapore, SINGAPORE – As the market shows signs of recovery, CNN Business’ headline of “JP Morgan’s move into crypto puts the rest of the industry on notice” says nothing of Jamie Dimon eating crow or that the move seems both opportunistic yet contrived. What was termed “previous skepticism” in the article is an understatement. Dimon notoriously called Bitcoin (BTC) a “fraud” that should be collectively destroyed by government around the world. He also called it a scam among other derogatory terms.

The namesake JP Morgan JPM Coin is meant to ease transfer of payments between corporate accounts as a start. Its use is primarily for institutional clients and securities transactions built on permission-based Quorum smart contracts, although not exclusively. In a sense, the aim is to streamline money flows with issuance, transfer and redemption between subsidiaries and affiliated external parties. They are also looking to rope in other financial institutions to join the fray.It’s one-to-one redeemable in fiat currency held of JP Morgan. The financial institution is that they they are deemed more trustworthy than the issuers of stablecoins such as Tether (USDT).

Forbes also wrote that JPM Coin is not a cryptocurrency but rather a digital currency. Tomatoes or tomatoes? This is explained that it is operated privately and will be used only for money transfers. It may be their way of circumventing the rule of thumb. As it grows it will be harder to control like a public network. They won’t be the first one while others join to reinvent the wheel.

JP Morgan CEO Jamie Dimon

Many are still calling out JPM as a scam coin. “JP Morgan coin is a scam – it’s solving a problem that has already been solved by Bitcoin,” wrote YouTuber Michael Gu in the description section of his video upload on the subject. “For centuries big banks have had a monopoly on currency transfers – and they charge a large premium for essentially sending digital IOUs to each other. Now they are taking our freely available technology as their own. Simply said: Why should we trust a bank that has been fined for: toxic securities abuses, money laundering, consumer protection violation …”

He also mentioned that JP Morgan is “taking free technology,  slightly modifying that and touting that they can save their clients’ money”. And while It’s about time as well that cross border payment transfers be rendered more efficient with lower transaction fees as compared to say the SWIFT network, others are returning the favour and calling JPM a scam and that Dimon most likely bought the dip.  But there are already existing cryptocurrencies that already fulfil this role. In particular, Ripple’s infrastructure is ripe of using. Ripple CEO Brad Garlinghouse retorted that JPM coin “misses the point” of cryptocurrency and voiced his take on this bank coin.

He tweeted:  

“As predicted, banks are changing their tune on crypto. But this JPM project misses the point — introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer.”

His prediction is of course his 2016 LinkedIn op-ed titled “The Case Against BankCoin” where he wrote that he “strongly believe banks need an independent digital asset to enable truly efficient settlement and we believe XRP is best positioned for that role.”

Hence, why the need for a dedicated JPM Coin? Security issues may be trumpeted as the reason but centralisation and a degree of control given its stable coin nature to the USD. There are also privacy features to ensure that not all transactions will be viewable by everyone. This, and also first-mover advantage.

Previously, Ed Yardeni, the former chief economist at Deutsche Bank who now leads Yardeni Research says: “JPMorgan and the other big banks have no choice but to go down this road. If JPMorgan doesn’t do it, someone else will.”