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JP Morgan is rolling out the first US bank-backed cryptocurrency to transform payments business

(Article published by Hugh Son with same title in CNBC)

The first cryptocurrency created by a major U.S. bank is here — and it’s from J.P. Morgan Chase.

The lender moves more than $6 trillion around the world every day for corporations in its massive wholesale payments business. In trials set to start in a few months, a tiny fraction of that will happen over something called “JPM Coin,” the digital token created by engineers at the New York-based bank to instantly settle payments between clients.

J.P. Morgan is preparing for a future in which parts of the essential underpinning of global capitalism, from cross-border payments to corporate debt issuance, move to the blockchain. That’s the database technology made famous by its first application, bitcoin. But in order for that future to happen, the bank needed a way to transfer money at the dizzying speed that those smart contracts closed, rather than relying on old technology like wire transfers.

 “So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” said Umar Farooq, head of J.P. Morgan’s blockchain projects. “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”

For some, J.P. Morgan’s new currency may come as an unexpected development for a technology that rose from the wreckage of the financial crisis and was supposed to disrupt the established banking world.

 When the international payments are tested, it will be one of the first real-world applications for a cryptocurrency in banking. The industry has mostly shunned the asset class as too risky. Last year, J.P. Morgan and two other lenders banned the purchase of bitcoins by credit card customers. And Goldman Sachs reportedly shelved plans to create a bitcoin trading desk after exploring the idea.

Dimon bashed bitcoin

Though holders of digital currencies may seize on the news that a major financial institution is issuing its own crypto as bullish for the asset class, retail investors will probably never get to own a JPM Coin. Unlike bitcoin, only big institutional clients of J.P. Morgan that have undergone regulatory checks, like corporations, banks and broker-dealers can use the tokens.

There are other key differences between the bank’s crypto and bitcoin, which J.P. Morgan CEO Jamie Dimon has bashed as a fraudthat won’t end well for its investors. (To be clear, he and his managers have consistently said that blockchain, as well as digital currencies that were regulated, hold promise.)

Each JPM Coin is redeemable for a single U.S. dollar, so its value shouldn’t fluctuate, similar in concept to so-called stablecoins. Clients will be issued the coins after depositing dollars at the bank; after using the tokens for a payment or security purchase on the blockchain, the bank destroys the coins and gives clients back a commensurate number of dollars.

Real-time settlement

There are three early applications for the JPM Coin, according to Farooq.

The first is for international payments for large corporate clients, which now typically happens using wire transfers between financial institutions on decades-old networks like Swift. Instead of sometimes taking more than a day to settle because institutions have cut-off times for transactions and countries operate on different systems, the payments will settle in real time, and at any time of day, he said.

The second is for securities transactions. In April, J.P. Morgan tested a debt issuance on the blockchain, creating a virtual simulation of a $150 million certificate of deposit for a Canadian bank. Rather than relying on wires to buy the issuance — resulting in a time gap between settling the transaction and being paid for it — institutional investors can use the J.P. Morgan token, resulting in instant settlements.

The final use would be for huge corporations that use J.P Morgan’s treasury services business to replace the dollars they hold in subsidiaries across the world. Unseen by retail customers, the business handles a significant chunk of the world’s regulated money flows for companies from Honeywell International to Facebook, moving dollars for activities like employee and supplier payments. It generated $9 billion in revenue last year for the bank.

“Money sloshes back and forth all over the world in a large enterprise,” Farooq said. “Is there a way to ensure that a subsidiary can represent cash on the balance sheet without having to actually wire it to the unit? That way, they can consolidate their money and probably get better rates for it.”

Looking further out, the JPM Coin could be used for payments on internet-connected devices if that use for blockchain catches on, Farooq said.

J.P Morgan is betting that its first-mover status and large market share in corporate payments — it banks 80 percent of the companies in the Fortune 500 — will give its technology a good chance of getting adopted, even if other banks create their own coins.

“Pretty much every big corporation is our client, and most of the major banks in the world are, too,” Farooq said. “Even if this was limited to JPM clients at the institutional level, it shouldn’t hold us back.”

Tesorería chilena implementará blockchain en el registro de pagos

(Artículo publicado por Ernesto Cova con mismo título en CoinCrispy)

En medio de sus iniciativas en pro de la automatización y modernización de sus operaciones, la Tesorería General de la República de Chile (TGR) confirmó el lanzamiento de un proyecto que almacenará el registro de datos sobre una red blockchain.

Gracias al apoyo de la Secretaría General de la Presidencia de Chile,  la Tesorería pudo desarrollar el proyecto. Según el reporte, el ente gubernamental aspira a fomentar la transparencia en el proceso de registro de pagos, además de automatizar el proceso y eliminar las diferencias existentes entre los saldos de los contribuyentes.

De esta forma, el proyecto, llamado TGR Blockchain, surge como una solución en medio de un momento en el que los pagos por concepto de recaudación de impuestos no siempre corresponden en los registros de ambas partes. Utilizando una red blockchain, todas las transacciones quedarán registradas de forma inalterable y en tiempo real en una red distribuida para todos los involucrados.

Sobre el proyecto, Ximena Hernández, tesorera general de Chile, comentó: “La digitalización de estos procesos es un desafío fundamental para la Tesorería General de la República en el contexto de innovación y modernización que estamos impulsando”.

No es la primera iniciativa del gobierno chileno por implementar tecnología blockchain a sus operaciones. Por ejemplo, la Comisión Nacional de Energía implementó un sistema basado en DLT para certificar información en el sector energético Por otra parte, el Ministerio de Economía instauró mesas de trabajo para determinar los usos potenciales de la tecnología blockchain en operaciones gubernamentales financieras, de comercio, de verificación de identidad, salud y energía.

Sin embargo, no han mostrado tanta apertura con relación a las criptomonedas, en medio de una constante disputa entre los bancos más importantes de la nación y las casas de cambio de criptomonedas.

GM Financial se asocia con startup de blockchain para combatir el fraude de identidad

(Artículo publicado por Anna Baydakova con el mismo título en CoinDesk)

General Motors Financial, el brazo financiero del gigante de la fabricación de automóviles, se está asociando con la startup de blockchain Spring Labs en soluciones para la verificación de identidad.

La empresa, que cuenta con el ex asesor económico de Trump Gary Cohn en su junta de asesores, dijo que GM está explorando la adquisición de una participación junto con otros casos de uso. Un portavoz de GM Financial declinó comentar sobre la posibilidad de que GM o su subsidiaria se conviertan en accionistas de Spring Labs.

“Estamos explorando de forma activa el desarrollo de financiamiento de automóviles y los casos de uso específicos de GM, además de los productos de verificación de identidad que se están desarrollando”, dijo el cofundador y CEO Adam Jiwan a través de un portavoz. Añadió que la red de blockchain Spring Labs y el trabajo en este momento estarán disponibles en versión beta privada para los socios en el tercer trimestre, y que la red en vivo está programada para lanzarse a principios de 2020.

En un comunicado de prensa, Mike Kanarios, director de estrategia de GM Financial, dijo que “el anuncio subraya nuestro compromiso e inversión para avanzar en estos esfuerzos y nos complace colaborar con Spring Labs como miembro del programa SFIP”. El programa Spring Founding Industry Partners (“SFIP”) está dirigido a crear una solución que cumpla con las normas para la verificación de identidad y la prevención del fraude de identidad. Spring Labs ha anunciado recientemente la inscripción de varias firmas fintech en el programa, como SoFi, OnDeck Capital, Avant, GreenSky, Funding Circle, BlueVine, Fundation, Upgrade, Fundbox y Better Mortgage.

“En última instancia, esta red está diseñada para transformar la forma en que la información y los datos se comparten globalmente”, explicó el comunicado de prensa de GM.

Spring Labs, fundada en 2017 por el equipo y la junta de la plataforma de préstamos Avant, está trabajando en una red basada en blockchain, que permitiría a los prestamistas, bancos y proveedores de datos intercambiar información sin compartir los datos de origen subyacentes, según la startup, con un especial focco en la información de identidad.

En marzo pasado, Spring Labs aseguró $ 14,75 millones en una ronda de financiamiento inicial liderada por August Capital.

Ripple teams with 10 new universities for blockchain research initiative

(Article published by Yogita Khatri with same title in CoinDesk)

Ripple, blockchain payments infrastructure firm, informs that its University Blockchain Research Initiative (UBRI) is aimed to help grow the blockchain technology ecosystem. Now joining the initiative are Carnegie Mellon, Cornell, Duke, Georgetown, Morgan State, Kansas, Michigan and Northeastern universities in the U.S., and the National University of Singapore and the University of Sao Paulo internationally.

Last month, Ripple also partnered with the Institute for Fintech Research (THUIFR) at Tsinghua University in Beijing under the UBRI.

Supported by Ripple’s UBRI resources, the institutions will carry out research, develop and launch course materials, host conferences and award scholarships to students pursuing work in blockchain, cryptocurrency, digital payments and related subjects.

Duke and Georgetown Universities, for instance, will support “expanding curriculum and teaching, research and technical projects and collaboration across disciplines”, while the University of Sao Paulo will receive funding for a blockchain innovation program.

With the new additions, the firm now has a total of 29 university partners, according to Ripple.

Ripple launched the initiative in June 2018, committing over $50 million to the effort and partnering with 17 universities from across the globe at the time.

“In less than a year, our initial UBRI partners hit the ground running with the launch of new research projects, events, course offerings and more,” said Ripple’s SVP of global operations, Eric van Miltenburg, in Thursday’s announcement.

“Expanding the ecosystem to a more global, diversified network of UBRI partners will only continue to enrich these projects,” he added.

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