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 clients. 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.

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.

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.

Over time, JPM Coin will be extended to other major currencies. The product and technology capabilities are currency agnostic.

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.





Group 10 Created with Sketch. Step 1 Coin Issuance Distributed Ledger Client Reserve Account Group 11 Created with Sketch. Step 2 Coin Transfer Distributed Ledger Client Reserve Account Group 12 Created with Sketch. Step 3 Coin Redemption Distributed Ledger Client Reserve Account

We successfully tested the movement of money between a client account and a J.P. Morgan account using the new technology.

We have always believed in the potential of blockchain technology and we are supportive of cryptocurrencies as long as they are properly controlled and regulated. As a globally regulated bank, we believe we have a unique opportunity to develop the capability in a responsible way with the oversight of our regulators. Ultimately, we believe that JPM Coin can yield significant benefits for blockchain applications by reducing clients’ counterparty and settlement risk, decreasing capital requirements and enabling instant value transfer.

Group Created with Sketch. Group Created with Sketch. Collateralization Group 19 Created with Sketch. Group 19 Created with Sketch. Blockchain Group 14 Created with Sketch. Group 14 Created with Sketch. Users Fill 4 Created with Sketch. Fill 4 Created with Sketch. Primary Users Cryptocurrencies (e.g., Bitcoin, Ether) Uncollateralized

Value is intrinsic to the coin Fiat-backed Stablecoins (e.g., USDC, Tether) Reserves held at a bank

Transparency about adequacy of collateral varies by Stablecoin

Most stablecoins claim to have a 1:1 fiat collateral JPM Coin 1:1 redeemable in fiat currency held by J.P. Morgan (e.g., US$) Cryptocurrencies (e.g., Bitcoin, Ether) Public – open access Fiat-backed Stablecoins (e.g., USDC, Tether) Public – open access

In case of some stablecoins (e.g., USDC) only exchange customers can mint (buy with US$) or redeem (sell for US$) stablecoins but anyone can own or trade them JPM Coin Permissioned (i.e., enterprise grade secure blockchain solutions built by J.P. Morgan and/or partners)

Only institutional customers passing J.P. Morgan KYC can transact with these coins Cryptocurrencies (e.g., Bitcoin, Ether) Primarily retail

Limited wholesale investor base Fiat-backed Stablecoins (e.g., USDC, Tether) Retail

Limited wholesale investor base JPM Coin Exclusively for institutional customers (e.g., Banks, Broker Dealers, Corporates Cryptocurrencies (e.g., Bitcoin, Ether) Investment Fiat-backed Stablecoins (e.g., USDC, Tether) Investment JPM Coin Blockchain use cases involving payments

* J.P. Morgan does not endorse the use of any particular cryptocurrency for investment or other purposes.

With our fortress balance sheet, expertise in blockchain and global payments network, J.P. Morgan can seamlessly and securely transfer and settle money for clients around the world.



Strong Balance Sheet - with a $2.6 trillion balance sheet, JPMorgan Chase N.A. will redeem each JPM Coin in fiat currency. In other words, one JPM Coin represents $1.

- with a $2.6 trillion balance sheet, JPMorgan Chase N.A. will redeem each JPM Coin in fiat currency. In other words, one JPM Coin represents $1. Security and Innovation - JPMorgan Chase, the largest U.S. bank, spends hundreds of millions of dollars each year on cybersecurity and has a Blockchain Center of Excellence that is leading innovation in financial services.

- JPMorgan Chase, the largest U.S. bank, spends hundreds of millions of dollars each year on cybersecurity and has a Blockchain Center of Excellence that is leading innovation in financial services. Strong Controls and Compliance - In addition to hundreds of millions of dollars invested annually in cybersecurity, JPMorgan Chase has strong AML and KYC controls in place.

- In addition to hundreds of millions of dollars invested annually in cybersecurity, JPMorgan Chase has strong AML and KYC controls in place. Regulatory Oversight - being a nationally chartered U.S. bank with global presence, JPMorgan Chase must comply with banking laws and regulations. J.P. Morgan is supervised by banking regulators in the United States and in the international jurisdictions in which it operates.

JPM Coin is currently a prototype. As we move towards production we will actively engage our regulators to explain its design and solicit their feedback and any necessary approvals.

The JPM Coin will be issued on Quorum Blockchain and subsequently extended to other platforms. JPM Coin will be operable on all standard Blockchain networks.

It is still too early to assess the ultimate impact of blockchain on different businesses. We continue to work with our clients around the world to explore different use cases for this type of technology.

IIN transfers information, not payments, between correspondent banks. The JPM Coin, representing fiat currency, is designed to instantaneously transfer value.

JPM Coin is currently a prototype that will be tested with a small number of J.P. Morgan’s institutional clients, with plans to expand the pilot program later this year. JPM Coin is currently designed for business-to-business money movement flows, and because we are still in a testing phase, we don’t have plans to make this available to individuals at this stage. That said, the cost-savings and efficiency benefits would extend to the end customers of our institutional clients.