With JPM Stablecoin And Blockchain Launch, Here Are the Talking Points

 

Jamie Dimon, the CEO of J.P. Morgan, at some point, regarded Bitcoin as a scam and was bearish about the fortunes of digital currencies. However, Dimon recently announced J.P. Morgan’s entry into the crypto space with the JPM Stablecoin prototype and Onyx – a commercialized blockchain and crypto research division.

The global head of wholesale payments at J.P. Morgan, Takis Georgakopoulos, confirmed that the JPM coin was first commercially utilized for global payments by a large institutional client in the final days of October 2020. 

So, what changed for JPMorgan? Why is the US bank now in the crypto space?

Let’s examine some of the talking points surrounding this move by JPMorgan.

What’s the JPM Coin?

The JPM Stablecoin is a digital currency designed for B2B instantaneous payments via the blockchain network. At the moment, it’s still at the testing phase and will only be available to JPMorgan’s institutional clients. However, It is believed that the move by J.P. Morgan’s move could boost the larger crypto and blockchain industries who feel strongly about the mainstream adoption of the blockchain technology.

What the Drive for J.P. Morgan?

According to Georgakopoulos, “it’s time to move past R&D and begin to commercialize technologies for real business applications; hence the launching of Onyx.” Each day, J.P. Morgan moves liquidity up to the tune of $6 trillion across over 100 nations, holding its place as one of the largest cross-border payment platforms in the world.

However, bank transfers depend on a complex network of corresponding banks, with payments getting rejected a few times due to errors or other issues. This instance spurred the introduction of the JPM Stablecoin and the Onyx network. “J.P. Morgan wants to resolve the issues surrounding wholesale payments, especially where huge savings could be made if a better solution is implemented,” according to Georgakopoulos.

“This development will drastically reduce bank fees on transactions, and also improve security and savings on remediating transactional mistakes,” says Umar Farooq, Onyx’s CEO.

Another driving factor for J.P. Morgan is the recent decision by PayPal to offer BTC to its customer base and Square’s move to add $50 million worth of BTC to its portfolio. Also, demography played an important role in J.P Morgan’s move. The younger generations prefer Bitcoin to Gold, and in today’s businesses, the preferences of this demographic group drive most business. 

JPM Coin vs Other Cryptos – What’s the Difference?

·         Collateralization

In terms of collateralization, the JPM Coin is redeemable in traditional currency held by JPMorgan on a 1:1 basis. Other cryptos such as BTC and ETH, are uncollateralized and their values are intrinsic to their coins.

 

For fiat-backed coins such as Tether, USDC, etc., their reserves are held in banks and the adequacy of their collaterals vary, although most of them claim a 1:1 redeemability with fiat collateral.

·         Blockchain Accessibility

JPM Coin runs on a permissioned blockchain and only J.P. Morgan’s institutional customers who have passed the company’s KYC can transact with the coin. BTC and ETH blockchain on the other hand is open to the public. Likewise, the blockchain of fiat-backed coins is also open to public access.

·         Users

JPM Coin is exclusively available for use only by institutional customers such as Banks, Corporates and Broker-Dealer. Other cryptos and stablecoins are primarily available to investors.