JP Morgan Getting Involved with Cryptocurrency?
In terms of milestones within the cryptocurrency community, a major US bank moving into the crypto arena is a pretty big one. And that is exactly what JP Morgan has done with the JPM coin. Except, it is a little bit of a different proposition to your traditional cryptocurrency.
What is JPM Coin?
JPM coin is the JP Morgan altcoin that works on their bespoke blockchain and is designed to help them settle payments more expediently. It represents a major move by a banking organisation that is regulated under existing financial regulations and the cryptocurrency is as a result a bit of a different breed of animal compared to the likes of Bitcoin.
In fact, JP Morgan have always been highly critical of cryptocurrencies like Bitcoin and have previously had very harsh comments about Bitcoin itself. With that in mind, it makes this latest move a bit out of left field to say the least.
Why Have JP Morgan Moved Towards Cryptocurrency?
The main reason is that JP Morgan love blockchain technology and believe that it represents a positive change to traditional banking systems. They aren’t as positive about cryptocurrency and the message that seems to be coming from the JP Morgan management is that they view the JPM coin as a necessity to facilitate the blockchain rather than as a currency to be used openly in the real world.
They believe that the JPM coin will herald in a new breed of cryptocurrency that is regulated, transparent and safe. This is echoed by Umar Farooq (Head of JP Morgan’s Digital Treasury) who said;
“We are supportive of crypto-currencies as long as they are properly controlled and regulated.”
It’s so controlled and regulated in fact, that the JPM coin won’t be available outside of the JP Morgan financial network and is not going to be a tradable asset. It is purely designed to enable faster payments through JP Morgan financial institutions.
JPM Coin is Effectively a Private Ripple
Here is the real kicker, JPM Coin is effectively a private JP Morgan Ripple, which is real bad news for Ripple who had hoped to be adopted by banking and financial institutions the world over. This aggressive tactic by Ripple has paid off in so much as many banking organisations adopted it but as JP Morgan has discovered, you don’t need to adopt a retail cryptocurrency in order to make use of the blockchain tech.
That means banks and financial services the world over are now going to be creating their own private cryptocurrencies to mitigate risk. After all, why would they use Ripple with all their exposure to risk and plenty of public investors chomping at the bit to sue the owners when they can create their own tokens that are kept away from investors and traders.
In a market that is about to be squeezed by regulation, JP Morgan have made a bold decision to pioneer a safe way for banks to use blockchain tech without exposing themselves to a mountain of regulatory risk.
Watch this space as more banks are sure to follow!