In a recent report issued through Bloomberg, dominant U.S. bank, JP Morgan Chase & Co. (NYSE: JPM) believes that their cryptocurrency project will see limited release before the end of the year. Although they do not expect a full roll-out of the system, select clients will have the opportunity to prototype the new in-house cryptocurrency. Dubbed “JPM Coin,” details on the project first emerged in February of 2019, while the cryptocurrency market remained firmly in a downturn.
JPM Coin as envisioned is a blockchain system used to rapidly transfer ownership of bonds. JP Morgan has been very clear that the system will be mostly internal – between their system and that of client organizations. The coin itself will not be available on the open market. According to the bank, they’ve received interest from customers in the United States, Europe and Asia. JPM Coin represents one of the safest entry points for financial institutions looking to explore blockchain technology.
Struggling to Remain Relevant
When news first broke about JP Morgan’s cryptocurrency project, it was heralded as a possible precursor to the end of a prolonged market downturn. This ultimately did not pan out, in part due to the insular nature of the coin. While it may provide a much needed upgrade to legacy banking technology, a system that only sees internal use will remain a niche product.
Further, now that Facebook’s Libra project is out in the open, JP Morgan’s hesitant approach appears even more inadequate. The recent revival of the market has left investors less hungry for institutional investment news. Yet, due to the nature of JPM Coin, this may all remain irrelevant. So long as enterprise clients continue to show interest, the project will be successful within the limited scope set out for it.
JP Morgan’s Cryptocurrency Reversal
The release of JPM Coin remains one of the hardest pivots from a banking company in relation to the cryptocurrency industry. CEO Jamie Dimon famously bashed Bitcoin multiple times, occasionally using some colorful language to do so. This being the expected reaction from traditional banking executives, the market rarely reacted to his comments.
However, the sudden announcement of JPM Coin in February represented a significant shift in JP Morgan’s attitude. Although many within the company had reiterated that blockchain technology could be useful, the specific criticism of cryptocurrency evaporated. Their less-than-ambitious project may put JP Morgan in a unique position for the powerhouse bank. They’ll be playing catch-up against pre-existing market forces like Ripple. Succeeding may require a level of humility that the bank may not be able to manage.
Article By: Adam Stone