Need to Know
- JPMorgan’s JPM Coin, a form of cryptocurrency, is now live.
- The bank has created a new business unit, called Onyx, to oversee JPM Coin.
- The first global payments using JPM Coin will take place this week by an unnamed tech firm.
- The launch marks a large shift towards traditional banks embracing cryptocurrency.
- JPMogran sold a portion of its blockchain network to Consensys in August.
JPMorgan’s JPMCoin will be used commercially for the first time this week, marking a breakthrough in blockchain technology that has prompted the bank to create an entirely new business unit.
JPM Coin will be used by a large technology client to issue global payments, Takis Georgakopoulos, JPMorgan’s global head of wholesale payments, told CNBC on October 27. Georgakopoulos did not name the client but did reveal that JPMorgan has created an entirely new business unit, called Onyx, specifically for JPM Coin transactions.
“We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business,” Georgakopoulos said.
According to the same CNBC report, JPM’s blockchain-based Interbank Information Network will soon rebrand as Liink and will soon launch the capacity to validate payments before they’re sent. This could eliminate some of the current pain points encountered during the process of issuing cross-border payments, whereby payments are occasionally rejected due to errors in account information. JPMorgan currently moves more than $6 trillion per day in cross-border payments, across more than 100 countries.
In addition, JPMorgan is considering the use of blockchain technology to issue digital versions of paper cheques, which will eliminate around 75% of the costs accrued by banks to send physical versions of these payments. Georgakopoulos noted that this transition could “make checks available in a matter of minutes as opposed to days”
JPMorgan started trials of bitcoin in February 2019. The bank built the cryptocurrency on Quorum, the version of Ethereum developed by the bank which was acquired by ConsenSys in August.
The news from JPMorgan comes not long after PayPal entered the cryptocurrency game, announcing on October 21 that it plans to launch its own cryptocurrency service by early 2021. Facebook is also working on its own cryptocurrency but has faced roadblocks, as G7 leaders have indicated the social media company requires proper regulation.
It has been a big year for JPMorgan, as the company has launched a series of new products and services. Earlier this month, the bank unveiled its plans to launch its QuickAccept card reader, which lets merchants accept card payments either through a mobile app or a contactless card reader, and competes directly with services such as Square and PayPal. The company also launched a digital chequing account for kids and revealed plans to launch a digital bank in the UK in 2021.