JPM Coin competes with the Federal Reserve as much as with Ripple
JPMorgan says that its new dollar stablecoins are collateralized against client dollar deposits but it also emphasizes its own strong balance sheet as surety.
Yes, its announcement had considerable comedy value. Umar Farooq, head of digital treasury services and blockchain at JPMorgan, must have struggled to keep a straight face while asserting “we have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies,” given his boss’s previous dismissal of Bitcoin as a fraud.
But make no mistake. JPM Coin, the token representing US dollars created by the largest bank in the US to enable instantaneous transfer of value between client accounts across its own Quorum blockchain platform, is a big deal.
It suggests that JPMorgan is not convinced by the efforts of Swift to ensure much faster cross-border payments across existing rails for money transfer.
It increases the likelihood that blockchain will have a central role in securities markets. Bonds and equities are already being transferred on blockchain but associated payments are not yet. That may change now.
It shows development along these lines will likely progress in closed, permissioned, regulated networks, utterly inimical to the ideals of the founders of the first bitcoin blockchain.