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Dubbed JPM Coin, the new tokens, which will be the first cryptocurrency backed by a U.S. bank, are set to be tested to instantly settle transactions, on a small portion of payments, among clients of the big bank's wholesale payments business.
|JPM||JP MORGAN CHASE & CO.||119.16||-1.07||-0.89%|
"The JPM Coin isn't money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorganChase," the company said in a press release.
In short, a JPM Coin will have a fixed value redeemable for one U.S. dollar. However, it won’t trade freely like bitcoin or other cryptocurrencies.
"When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalents amount of U.S. dollars, reducing the typical settlement time," the company added.
JPMorgan said it believes the new technology can help lower costs and risks associated with big money transfers around the world.
While the new tokens are initially designed for major 'institutional clients' for business-to-business transactions, not individuals, the cost-savings and efficiency benefits "would extend to the end customers of our institutional clients," the company said.
The news does not come as a surprise either, as JPMorgan has been leading the charge in testing blockchain payments for more than two years.
As reported by FOX Business last September, more than 157 banks globally have joined a blockchain-based payment project led by JPMorgan to test how to streamline cross-border transactions.
The shared ledger called Interbank Information Network (IIN) was built by Dimon’s team in 2017 through its own blockchain platform called Quorum.
While Dimon did famously call bitcoin a "fraud" and "worse than tulip bulbs" --- a reference to the 17th century economic bubble -- he and his key managers have consistently said that blockchain and regulated digital currencies do have promise.