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Watch Out, Ripple: JPMorgan Coin Could Be A Direct Threat

The new JPM Coin could target Ripple's business model.

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Hell appears to have frozen over, as JPMorgan, run by bitcoin’s biggest bête noire on Wall Street, is launching its own cryptocurrency. The newly-announced JPM Coin will be used for settling transactions in real-time among clients of the bank’s wholesale business, the bank announced today. The token resembles a stablecoin in that it will be pegged 1:1 to the U.S. dollar, much like Tether (USDT). Meanwhile, the cross-border focus sounds a lot like the business model of a certain leading blockchain company.

It gets better. JPMorgan already built its own internal blockchain, a permissioned Ethereum fork dubbed Quorum. It seems they’ve finally realized that it’s going to take a cryptocurrency to make it work:

“Exchanging value, such as money, between different parties over a blockchain requires a digital currency, so we created the JPM Coin,” according to the announcement. 

Well, duh.

So why didn’t Jamie Dimon, the chief executive at the biggest U.S. bank based on assets, just ring Ripple’s Brad Garlinghouse? Now that the cat is out of the bag on accelerated bank settlements, and customers know they won’t have to wait two days for a payment to clear, Dimon could have partnered with Ripple for XRP-based xRapid. Instead, the battle lines have been drawn over the future of cross-border payments, and it’s JPMorgan on one side and Ripple on the other.

The thing to keep in mind about JPM Coin is that its use case will be controlled. JPMorgan is testing it in limited capacity among a tiny sliver of transactions in its wholesale business, which is the product of the recent combination of Chase Merchant Services and the investment banking arm’s Treasury Services segment, designed for “businesses of all sizes.”

This suggests that JPMorgan won’t be targeting the same customers as Ripple, at least not directly. Ripple counts among its customers leading banks such as Spain’s Santander for cross-border payments in addition to credit unions and smaller payments processors and financial institutions. JPM Coin is targeting “a small number of J.P. Morgan’s institutional clients.”

As eToro Senior Analyst Mati Greenspan pointed out on Twitter, crypto exchanges won’t be lining up to list JPM Coin, nor can they.


Friends Close and Enemies Closer

This is not to say that Ripple shouldn’t be worried. JPMorgan has stated that it has plans to “expand its pilot program later this year.” Plus, the bank has already proven that it can say one thing and do another, as evidenced by Dimon infamously referring to bitcoin as a “fraud” while simultaneously building up the bank’s blockchain business. Do as I say, not as I do.

Here’s the rub: JPM Coin happens to be compatible with other blockchain networks.

According to the announcement:

“The JPM Coin will be issued on [JPMorgan’s proprietary] Quorum Blockchain and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks.”


The Stakes Are High

eToro’s Greenspan further explained what’s at stake to Crypto Briefing:

Certainly a bittersweet announcement from Ripple’s perspective. Bitter because JPM coin is a direct competitor. Sweet because having compilation from a player like JPM could entice the regulators to take a more favorable stance.

Indeed, Ripple’s Garlinghouse is probably either cursing Dimon under his breath or thanking him. Dimon may have just done more for the mainstream adoption of cryptocurrency and the blockchain than Ripple ever could have done alone.

While JPM Coin is business-to-business, individual consumers are eventually going to begin asking questions. They are likely going to want to know how they can participate in this movement or at least demand an explanation for how the bank can engage in this market yet ban credit card purchases of cryptocurrencies.

Yes, JPMorgan has single-handedly helped to catapult blockchain-fueled cross-border payments into the spotlight. This is Ripple’s bread and butter.  Once word gets out in the mainstream that archaic technology such as wire transfers have been replaced, Ripple is going to have a place in that conversation. That’s why Garlinghouse may actually want to call Dimon to say thank you. Or, perhaps, replace ‘Thank’ with a different word.

Based on the XRP price in response to the JPM Coin development (it’s currently trading flat), we’d say the jury is still out.


The author is invested in digital assets, but none mentioned in this article.

 

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3 Comments
  1. nick black says

    It’s another hacked up stable coin. And the US keeps printing USD so, there will never be a cap on JPM (garbage) Coin.

    So… I guess, “thanks,” is in order. Jamie just solidified the blockchain in the eyes of every other banker on earth. They’ll look around, shuffle a bit, and join Ripple net or Corda. Jamie, you think you made a good move… you just put your queen in check. Mate in 3.

  2. Todd B says

    While I commend JPMorgan for creating a crypto asset and utilizing the blockchain something to keep in mind is that this will never be a universal currency. this coin is meant for JPMorgan and its customers alone. In fact JPMorgan is not the first bank creating its own digital asset and definitely wont be the last either . what people dont realize is that as a bank, there is no way JPMorgan will convince its competitors like Bank of America for example to use its digital asset. thats like asking the US to adopt the Euro. Not gonna happen. Every digital asset has its place and where Ripple and XRP come into play are bridging them all together with liquidity… Much different target. Regardless, Adoption is happening people! hope you’re ready.

  3. ReM says

    To put the JPM Coin in perspective, eventually “the proof of the pudding is in the eating”. So, before people jump to conclusions, I would very much like to see some real life comparison on true Key Performance Indicators, like, trust, transaction speed/tps/costs, degree of centralisation/control, PoW vs Consensus etc. between e.g. the “new” SWIFT GPI, JPM Coin and XRP.
    All of a sudden there isn’t a lot of noise about these things, especially from JPM themselves who made a lot of noise on Bitcoin/crypto in general for example. Almost like these KPI’s are not important anymore. Please mind that it is because of parties like JPM blockchain and crypto exists in the first place. (NB. Remember the latest financial crisis, the biggest after the second WW, and all the bailouts with YOUR tax money?) You could also ask yourself the question why SWIFT suddenly is teaming up with R3 after beating down crypto and XRP for quite some time already? (although R3 is planning to make use of XRP on their CORDA settler by the way)
    This latest move from both SWIFT and JPM is not a sign of strength, it is a clear sign of weakness and fear. Fear Of Missing Out. Fear of losing their dominant position, power, control. Their current business model is seriously at risk. They HAVE TO make moves like this or it certainly is end of story for them.

    However, beyond all the hype, speculation, FUD, FOMO, Legal battles, threats etc. it eventually comes down to the essence, the substance, the core. Are you really able to deliver/to meet what the people demand?

    This will take some time but the outcome is certain. Do you trust the “old boys network” with all their strings attached? Or do you trust a radically new technology that delivers and puts the power back where it belongs namely, in the hands of us all!

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