In 2017, Jamie Dimon, JPMorgan Chase’s chief executive, declared bitcoin a “fraud” and said any employee caught trading it would be fired for being “stupid.”
On Thursday, JPMorgan became the first major U.S. bank to introduce its own digital token for real-world use, the latest step in Wall Street’s evolving approach to the blockchain technology that underpins cryptocurrencies like bitcoin and Ether.
Despite questioning bitcoin’s legitimacy, Dimon has said he recognizes blockchain’s potential in the future of the global financial system. And JPMorgan has already released a blockchain platform, Quorum, that several institutions are using to keep track of financial data.
With the announcement of its coin, JPMorgan is widening its experiment and moving to make the idea of digital currencies more palatable to its typically risk-averse corporate customers.
“Clients engaged us, saying they need a way to move money onto the blockchain,” Umar Farooq, who leads JPMorgan’s blockchain efforts, said.
The bank’s token is unlikely to shake up the financial system anytime soon. Because it will be run by JPMorgan, it lacks the fundamental qualities that have made cryptocurrencies so radical: the freedom from middlemen and from regulatory oversight.
JPMorgan will control the JPM Coin ledger, and each coin will be backed by a dollar in JPMorgan accounts, giving the coins a stable value. That means JPM Coin will not be subject to the wild price volatility that has drawn speculators to other cryptocurrencies.
The entry of a major Wall Street bank into the market shows the mundane ways in which cryptocurrency technology has begun to gain traction in the traditional financial system a year after the prices of bitcoin and other digital tokens crashed in spectacular fashion.