One of the largest investment banks in the world, JPMorgan Chase, announced that it issued its own digital currency to make instant payments. Of course, there is no talk of decentralization or real cryptocurrency.

Not a cryptocurrency, but a digital coin

JPMorgan issued a stablecoin called JPM Coin pegged to the US dollar. It will be used in the system of instant payments between bank customers, primarily for international corporate transactions.

"The JPM Coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts."

Testing the system will begin in the next few months.

"JPM Coin is currently a prototype that will be tested with a small number of J.P. Morgan’s institutional clients, with plans to expand the pilot program later this year. JPM Coin is currently designed for business-to-business money movement flows, and because we are still in a testing phase, we don’t have plans to make this available to individuals at this stage," said Umar Farooq, head of Digital Treasury Services and Blockchain.

The ideologically new coin looks like a competitor to the already existing Ripple blockchain system, but many believe that JPM Coin has more chances to enlist the support of the market due to the reputation of its parent company. According to Tushar Jain, a managing partner at Multicoin Capital, remarked that banks were never planning to use XRP for settlements, thus concluding that JP Morgan will “wipe the floor with Ripple.”

“Banks were obviously never going to use XRP for settlements and enrich Ripple Inc (who owns more than half of all XRP). They would rather enrich themselves instead!"

Not cryptocurrency

The head of JPMorgan Chase Jamie Dimon is known for his negative attitude towards cryptocurrency. He called bitcoin a fraud and bitcoin investors as fools.

“The huge volatility of the price of cryptocurrencies — with respect to either traditional currencies or to a basket of goods and services — has made use of cryptocurrencies as a unit of account impractical. Only hobbyists are using cryptocurrencies as a medium of exchange, at least for conventional transactions for goods and services,” JPMorgan Chase analysts wrote in one of last year’s client notes.

At the same time, they recognized that cryptocurrencies pose a threat to bank activities since they are an alternative to existing payment processing systems. Increased competition from such services may exert negative pressure on JPMorgan Chase revenues or lead to a decrease in its market share.