JPMorgan’s stablecoin ventures into interbank transactions

abdelaziz Fathi

JPMorgan Chase & Co.’s proprietary digital token, JPM Coin, is set to expand its use case by facilitating interbank transactions on Partior, a blockchain ledger developed in collaboration with DBS Bank, Temasek, and Standard Chartered.

This ledger aims to enable quick, multi-currency transactions among its members while still relying on traditional correspondent banking for settlement.

Singapore- based Partior is operational, but specific details about its usage and the extent of participation by different banks remain somewhat unclear. While DBS Bank is active on the platform, other banks have yet to fully utilize it. JPMorgan has gained a lead among U.S. banks in deploying this technology, having received approval from the United States Office of the Comptroller of the Currency in May for Partior’s use.

The inclusion of JPM Coin in Partior is expected to increase the token’s utility. JPM Coin, given its association with JPMorgan and its existing presence in banking markets, holds substantial potential for widespread adoption. As of October, JPMorgan’s Global Head of Payments, Takis Georgakopoulos, revealed that JPM Coin was being used to settle around $1 billion daily.

JPM Coin serves as a payment rail and deposit account ledger, enabling participating entities to transfer fiat money held in deposit with the largest bank in the United States. Since its launch in 2019, the token has facilitated over $400 billion in transactions. That compares to JPMorgan’s daily transaction volume of nearly $10 trillion through conventional means.

JPM Coin was initially designed as a temporary means for real-time gross settlement among JPMorgan’s institutional clientele. The digital token is a stablecoin pegged directly to the US dollar, with a 1:1 collateralization ratio. Its primary purpose was to address fundamental inefficiencies that plague the existing payment infrastructure.

While the majority of JPM Coin transactions currently occur in US dollars, JPMorgan has plans to extend its utility. The next step involves creating a retail version of the digital asset. This could be achieved through a central bank digital currency (CBDC) or by enabling banks to develop digitalized versions of deposits using blockchain technology.

Earlier in June, the Wall Street lender expanded the usage of its blockchain-based settlement token to include euro-denominated payments. The first transaction on the platform was conducted by German tech conglomerate Siemens AG.

The trial took place on JP Morgan’s permissioned blockchain, a distributed ledger that is not open to the public and requires authorization for access. The platform enables the lender’s institutional clients to conduct wholesale payments across global accounts using blockchain technology as the underlying infrastructure.

JPMorgan, which its CEO, Jamie Dimon once bashed cryptocurrencies as a fraud that will not end well for its investors, created a new unit to handle its blockchain business called Onyx.

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