JPMorgan is the largest investment bank in the word. With about $3 trillion in assets under management and over $310 billion in objective worth, the company has become a powerhouse in the financial industry.
It is no exaggeration to say that people listen to this company – because they do. However, it shocked the world today when it announced an official foray into the digital asset space.
The Hype is Realized
Earlier this week, finance news medium CNBC reported that the investment banking giant had finally launched its stablecoin project. The asset, known as JPM Coin, will now be available to the company’s partners to ensure a more seamless and effective payment system.
Takis Georgakopoulos, JPMorgan’s Global Head of Wholesale Payments, confirmed that the asset had launched. He added that the company has now signed a major partner, and that they were looking forward to sing how effectively the asset would work in the long run.
Along with the JPM Coin, JPMorgan also launched a new business unit that will drive crypto adoption. The unit is dubbed “Onyx,” and it already has over a hundred full-time staff members working for it. It is headed by Umar Farooq, the Head of Blockchain for JPMorgan.
The JPM Coin isn’t exactly new. JPMorgan fist announced the product last February, with Farooq explaining to CNBC at the time that the asset will help improve payment efficiency worldwide. Farooq also praised the technology, explaining that it can help to improve several parts of the economic and financial industries.
As Georgakopoulos explained to CNBC this week, JPMorgan has come to find that there are some impressive applications that can be made with blockchain technology. However, the area where the company seems to be focusing primarily on is with payment efficiency. This is a significant problem for many companies and nations, with cross-border payments lagging across the world.
Currently, the industry standard when it comes to cross-border payments is the Society for Worldwide Interbank Financial Communications (SWIFT). The network is vast, connecting thousands of financial institutions across the world for the purpose of doing business and effectively conducting transactions. However, it has come under scrutiny over the past few years for being slow and ineffective.
Transactions on SWIFT can take days to get settled in some cases. Based on their volume, they can also be pretty expensive.
Several institutions have tried to find alternatives for this. JPMorgan is merely throwing it shat into the ring and looking to change the industry. Hoping to sign on more members, JPMorgan is now making a full-fledged commitment to the use of blockchain technology in its mission.
“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,” the Head of Wholesale Payments explained.
Georgakopoulous also explained that they had seen the potential for blockchain to help inreducing inefficiencies in the global payment sector. In part, he said:
“Using a version of blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it’s possible we can save 75% of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days.”
Georgakopoulos didn’t reveal who the company’s first partner for the JPM Coin is. However, he confirmed that it is a tech firm, and that they would begin using the asset for conducting wholesale payments as from this week.
A Blockchain Play for JPMorgan
To be fair, this move is pretty interesting. JPMorgan has a rather nasty history with cryptocurrencies, especially as its CEO, Jamie Dimon, has bashed Bitcoin on several occasions. The billionaire has called Bitcoin a useless investment, even going as far as threatening to fire any of his employees who purchased the asset.
While Dimon hasn’t made any negative comments on the top cryptocurrency in a while, it seems safe to say that he could have had a change of heart and is now possibly a fan of the asset.
Even if he wasn’t a fan of Bitcoin till now, the fact that JPMorgan has ben the first megabank to get in on the blockchain train isn’t surprising. The bank has already gained a reputation for being forward-thinking, especially when it comes to their investments and approach to business technology.
Although there have been no tests to ascertain the JPM Coin’s efficiency, JPMorgan has had a full year to work on the asset and ensure that it works in optimal condition. They also seem pretty confident in the asset’s ability to improve transaction processing beyond what is being seen with the SWIFT protocol. The company is focusing on bolstering financial efficiency for now, but success with that could seem them expand the asset’s reach in several ways.