J.P. Morgan Chase jumps into cryptocurrency with own digital coin

Feb. 14 (UPI) -- J.P. Morgan Chase became the first major U.S. bank to enter the cryptocurrency arena Thursday by announcing plans to introduce JPM Coin to instantly settle payments between clients.

In a statement, J.P. Morgan said it built and successfully tested the digital coin, created on blockchain-based technology enabling the instantaneous transfer of payments between institutional accounts.

J.P. Morgan chief executive Jamie Dimon has long bashed cryptocurrency and its king bitcoin as a "fraud," but also conceded that regulated blockchain could hold promise in the market.

"The JPM Coin isn't money per se," Umar Farooq, head of Digital Treasury Services and Blockchain, said in a statement. "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," he added.

To this point, the banking industry had shied away from cryptocurrency that was meant to be a disruptor in the financial world. J.P. Morgan and other lenders banned buying cryptocurrency last year because they deemed it too volatile, CNBC reported.

"J.P. Morgan is taking a significant step here," Adam Grimsley, a former BlackRock Inc. fixed-income investor who co-founded London-based crypto hedge fund Prime Factor Capital, told Bloomberg.

"The first bullet in any war is always the most important, and it looks like this could be the first move in a broader adoption of blockchain and digital currencies by large institutions," Grimsley continued.

Bitcoin, in the meantime, has fallen more than 80 percent from its high point in December 2017. J.P. Morgan calculated that the rebel digital currency is now being traded below the average cost it takes to mine.