Last Feburary 2019, J.P. Morgan became the first U.S. bank to create and successfully test a digital coin representing a fiat currency. The JPM Coin is based on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts. We sat down with Umar Farooq, head of Digital Treasury Services and Blockchain, to find out more about the announcement and what it means for the future of payments.

What is the JPM Coin and what is used for?

JPM Coin is a digital coin designed to make instantaneous payments using blockchain technology. Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin.

Are JPM Coin a currency or legal tender?

The JPM Coin isn’t money per se. It is a digital coin representing United States Dollars held in designated accounts at JPMorgan Chase N.A. In short, a JPM Coin always has a value equivalent to one U.S. dollar. When one client sends money to another over the blockchain, JPM Coins are transferred and instantaneously redeemed for the equivalent amount of U.S. dollars, reducing the typical settlement time.

Will it be used for other currencies besides the U.S Dollar?

Over time, JPM Coin will be extended to other major currencies. The product and technology capabilities are currency agnostic.

How does it work?

The diagram below is a simple representation of how the process works. In step 1, a J.P. Morgan client commits deposits to a designated account and receives an equivalent number of JPM Coins. In step 2, these JPM Coins are used for transactions over a blockchain network with other J.P. Morgan clients (e.g., money movement, payments in securities transactions). Finally in step 3, holders of JPM Coins redeem them for USD at J.P. Morgan.

JPM

Are regulators supportive of the JPM Coin?

JPM Coin is currently a prototype. As we move towards production we will actively engage our regulators to explain its design and solicit their feedback and any necessary approvals.

Does the JPM Coin run on Quorum, J.P. Morgan’s Blockchain Technology?

The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks.

Can I use JPM Coin as an individual customer?

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. That said, the cost-savings and efficiency benefits would extend to the end customers of our institutional clients.

Credits to: jpmorgan.com