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J.P. Morgan this month became the first U.S. bank to create and successfully test a digital coin representing a fiat currency.

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February 14, 2019

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J.P. Morgan this month 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.

So what exactly is the JPM Coin and what is it 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 Coins 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.


The full interview with Umar Farooq, head of Digital Treasury Services and Blockchain, is available on the J.P. Morgan website.