Developers: | JPMorgan Chase |
Date of the premiere of the system: | February 2019 |
Branches: | Financial services, investments and auditing |
Content |
2020: Start of Commercial Use
At the end of October 2020, the financial holding JPMorgan announced the start of using the JPM Coin cryptocurrency for commercial purposes for cross-border payments. To further develop blockchain initiatives, a special Onyx division has been created, in which, according to the head of the JPMorgan payment business Takis Georgakopoulos, more than 100 employees are already involved.
According to CNBC, JPMorgan intends to organize the transfer of JPM Coin to the technology giant, whose name was not disclosed. Commenting on the creation of Onyx, whose CEO is Umar Farouk, Georgakopoulos said:
We are launching Onyx because we believe that we are moving to a period of technology commercialization, moving from research and development to what can become a real business. |
According to Georgakopoulos, JPMorgan is focused on eliminating the main pain points in the field of wholesale payments, where the bank is one of the largest players that processes operations daily, the volume of which exceeds $6 trillion. In cross-border transfers that rely on a global network of correspondent banks, payments are sometimes rejected due to data errors or other problems. Each such refusal entails financial losses that could be avoided through the use of innovative solutions.
Umar Faruk explained that by using the blockchain, banks will be able to charge a fee of several cents from each transfer to confirm the necessary information. This will reduce the cost of correcting errors and create a model that would allow network members to earn money.
The use of blockchain, according to the head of Onyx, will also allow us to abandon paper checks, the processing of which requires a lot of human resources. With innovative technologies, you can reduce industry costs by 75% by making payments available within minutes, not days.[1]
2019: Cryptocurrency Announcement
In February 2019, J.P. Morgan Chase announced the release of its cryptocurrency and thereby became the first American bank with such a product.
A digital currency called JPM Coin is intended for instant settlements between J.P. customers. Morgan thus targets a large market: every day, legal entities transfer more than $6 trillion in funds around the world (data for February 2019).
According to CNBC, the status of a pioneer and a large market share (J.P. Morgan serves 80% of the largest Fortune 500 companies) give the bank advantages in this technology, even if competitors also begin to create their own digital currencies.
It's curious what's in J.P. Morgan previously criticized cryptocurrencies and called them meaningless. Bank CEO Jamie Dimon in 2017 called Bitcoin "a scam cleaner than tulip fever" and predicted it would close soon. Later, Dimon revised his point of view and repeatedly spoke positively about cryptocurrencies.
According to Fortune observers, there are two main reasons that prompted J.P. Morgan to change its attitude to digital currencies. The first is strategic: if cryptocurrencies are risk factors (the bank admitted that it has to compete with Bitcoin), it is better to be inside this market than to watch someone take it away from under his nose.
The second reason is related to competition. The large cross-border transfers that companies make are part of the complex cuisine of international operations. These movements of funds are traditionally carried out with the help of cashless transfers, which can take a day or more. Cryptocurrencies can be transmitted and received in a few seconds, which gives them a powerful competitive advantage.[2]