On Valentine’s Day 2019, J.P. Morgan gave a kiss to the blockchain/DLT community by announcing its JPM Coin– a branded stablecoin pegged to the dollar that will be used by its large institutional clients to settle payment transactions. Upon settlement, each coin would be burned and traded for a dollar. The ultimate benefits in the JPM Coin ecosystem will be found in the transaction speed and very low cost of execution. This is a noteworthy move given that there are obvious short term negatives to J.P. Morgan in that the launch of such an ecosystem might initially cut into some custodial profits.
Perhaps driven by the fact no bank could ever really control Bitcoin, J.P. Morgan’s CEO previously said that Bitcoin was a fraud. It is likely no coincidence that this launch only took place after Bitcoin cratered by nearly 80% of its value. Moreover, this announced future use of a “digital coin” is very much something J.P. Morgan could exert some control over – hence its name, and would not even initially be made available to J.P. Morgan’s retail clients. It is assumed that would change over time after deployment and this coin’s usage matures – retail clients may eventually be able to use JPM Coins for mobile payment transactions or in lieu of a time-consuming wire transfer.
Even though there was an unexpected major hiccup in 2018, as previously pointed out, “acceptance of blockchain technology by the financial industry will be indelible proof those mistakes of 1995 made by retail sales and marketing companies will not be repeated by the financial industry.” In other words, by jumping on board feet first to the adoption of a digital coin issued on its own Quorum permissioned blockchain, J.P. Morgan is taking a major step towards having the financial industry continue to lead the DLT movement until the technology catches up to other innovative use cases in other industries.