Two years after JPMorgan grabbed the headlines with its internal digital token project, the global mega-bank is looking to deliver on one of e-money's great promises: programmable money.
Officially launched in October, JPM Coin is, for now, more akin to corporate clients of JPMorgan holding their US dollar deposit accounts on a blockchain, said Umar Farooq, head of the bank's Onyx suite of applications.
This naturally allows money to move 24/7 between these companies. Lately eclipsed by the crypto bull market, JPM Coin works in conjunction with the Liink payment network of 400 banks and powers things like securities settlement (in repo transactions) on the basis of clients from JPMorgan.
But according to Farooq, this is only the beginning. Singer dollar-linked stablecoins, or emulate cryptocurrency in general, has never been JPM Coin's plan (which, to be clear, is not available to retail investors or traded on any market. crypto exchange).
"We are entering the programmability of JPM Coin " he said in a recent interview. "In fact, programming what the money can do for you, whether it's conditional payments, whether it's tax assessments. It's all very rule-based and , in the past you had to send specific instructions to a bank like JPMorgan. We increasingly want you to be able to schedule these things and tell the money what to do. " Umar Farooq, head of blockchain at JPMorgan (Umar Farooq, modified by)
This desire helps explain why JPMorgan chose to build its ether , Ethereum was designed specifically to allow c programs "if this, then that " complexes (called smart contracts) that were hard to do on Bitcoin, which was designed for the simple task of transferring digital money from A to B.
"When we compared Ethereum to other options, we were very drawn to the ability of smart contracts," said Farooq. "The fact that you can do more than 'a simple one-dimensional value transfer on this platform. "
Eye on DeFi
Ethereum also comes with likely support for the more large ecosystem of blockchain developers. And that keeps the door ajar for a bank like JPMorgan when it comes to the growing public arena for crypto.
The big story of Ethereum these days is the open, custodial home of pseudonymized commerce and lending known as Decentralized Finance (DeFi).
Theinstitutions are slowly but steadily edg to areas like DeFi, with banks like ING, based in the Netherlands, already talk about what can be learned from this new paradigm .
Fortunately for JPMorgan, Quorum, its licensed version of Ethereum technology, means the bank stays close to the action; what Farooq calls a "front row seat regarding innovations that are happening in the public blockchain arena.
"We are monitoring DeFi evolution very closely," said JPMorgan's blockchain chief.
“Although it is currently in the public sphere of cryptographie, there is clearly a future for DeFi as other assets begin to be placed on blockchains - whether they are licensed or fully public, that remains to be seen, ”added Farooq.
In addition to the appeal of DeFi, some banks have even eyed the possibilities offered by participation by proof of stake (PoS) on networks like Ethereum, an alternative energy efficient in the Bitcoin mining process, where you win by having a little skin in the game and by validating transactions.
"As far as ETH 2.0 staking goes, it's going to be a very interesting development," said Farooq. "I think this could open up more doors for people to interact with the Ethereum ecosystem. "
Farooq rejected the notion of a steadfast" enthusiast link "between the bank and Ethereum. That said, support for Ethereum ex has been around since the very early days, Farooq added, for example from people like Samer Falah, Quorum Engineering Manager at JPM.
Indeed, JPMorgan's relationship with Ethereum is long and varied. Formalized with the creation of the Enterprise Ethereum Alliance in 2017 , ties were strengthened last year when JPMorgan handed over the day-to-day management of Quorum to ConsenSys, the Brooklyn, NY-based software studio, led by Ethereum co-founder Joe Lubin. JPMorgan also conducted a $ 65 million funding rounds in ConsenSys.
" We have known Joe [Lubin] for a long time, "Farooq said." Our point ofVue was therefore that being part of ConsenSys also allows us to stay close to Ethereum proper in terms of evolution and gives us a bit of a front row seat.
He also found a good home for Quorum because JPMorgan is not a software company. It was rumored that the day-to-day management of Quorum was becoming a headache for the bank.
"As long as it was a little thing that was kind of done in a corner, that was fine," Farooq said. "Them As it started to expand, we were getting calls from our biggest customers saying, 'We're going to rely on Quorum, can you provide us with managed services support?' 'That's when we started to consider strategic options for Quorum to continue to grow and succeed outside of banking.