JPMorgan makes cryptocurrency push as blockchain becomes “real business”

Posted: 29 October 2020 5:16 pm

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JPMorgan has extensively shifted its blockchain efforts and branding this week.

Last Friday JPMorgan analysts suggested that Bitcoin could steal a significant portion of the market for gold. Citing Bitcoin’s popularity among millennials, they said even modest success could see Bitcoin prices double or triple. Bitcoin prices hit a new yearly high several days later.

At the same time, JPMorgan is reportedly reaching out to crypto-native firms as it looks to develop digital asset custody solutions in preparation for a groundswell of digital asset growth.

It’s not alone here. Last week PayPal also announced plans to buy, sell and store cryptocurrencies for users, and Singapore’s largest bank, DBS, said it was launching a digital asset exchange. Indian bank United Multistate Credit Co. Operative Society announced that it’s expanding its services to cryptocurrencies, including allowing in-branch cryptocurrency purchases at 34 locations in India.

Earlier this week JPMorgan launched a new business unit focused on blockchain and digital assets. The new business, Onyx, will house JPMorgan’s blockchain and digital asset efforts, and now has more than 100 dedicated staffers.

“We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business,” said JPMorgan’s head of wholesale payments, Takis Georgakopoulos to CNBC.

Another milestone, also achieved earlier this week, was the first live commercial use of JPM Coin by one of the bank’s large technology company clients. JPM Coin is JPMorgan’s own in-house digital currency. It’s a stablecoin, a digital currency pegged to the dollar. The JPMorgan Interbank Information Network (IIN) also got a fresh coat of paint with the launch of Onyx, rebranding as Liink.

Data has value, value has data

While JPM Coin is about directly transferring monetary value over the Internet, Liink “transfers information, not money, between correspondent banks” the company explains on its website.

But due to the way the world’s payment systems fell into place around correspondent banking networks, simply improving the way banks can share information is enough to bring pronounced improvements to cross-border payments.

For example, by allowing banks to share information confirming that payments have the proper account information and regulatory format before they are sent, banks and their customers can avoid the cost of rejected transfers.

Liink is launching with these functions for validating payments prior to sending.

Banks could not only cut costs, but also potentially make money from sharing this data, said Onyx CEO Umar Farooq to CNBC. By charging a few cents to confirm data for each transaction, there’s a model for banks to earn money by joining the Liink network.

Over 25 of the world’s top 50 banks and more than 400 other institutions have signed a letter of intent to join Liink.

Blockchain technology has seemingly been in a perpetual state of “almost there” for years now, but if the movements of JPMorgan and other institutions are any indicator, “there” is getting here, bit by bit.

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Disclosure: The author owns cryptocurrencies including BTC and LINK at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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