The Bank agreed on a Financing Mechanism using its currency pegged to The dDollar. JP Morgan considers the advantages of operating on a blockchain to optimize processes.
JP Morgan, the largest US-based bank, executed a repurchase agreement transaction with its broker using its own cryptocurrency JPM Coin – a dollar-pegged stablecoin – for liquidity.
The bank announced through a press release, the execution of the transaction as a way of guaranteeing finance and obtain liquidity in a more efficient way than current mechanisms.
Repurchase or “repo” transactions are widely used as a mechanism to obtain liquidity in financial institutions. These operations consist of an investor “providing a loan to the financial institution, only guaranteed with a public debt security,” describes the Spanish BBVA on its website.
Here, JP Morgan executed the operation to obtain intraday liquidity with the support of its JPM Coin, a project that dates back more than a year in which the institution has been advancing stronger in recent months.
The entity explained in its text that “both the collateral and the cash branches of repurchase transactions were settled using blockchain, and the cash branch took advantage of JPM Coin.”
Simultaneously, this medium reported that the bank created a new business unit, called Onyx, specifically focused on the development of its blockchain and the stablecoin JPM Coin.
The steps that JP Morgan has been taking contradict its assessments not long ago. Weeks before announcing its stablecoin, the institution referred to blockchain as an “immature and overvalued” technology. However, for at least four years now, the bank has been exploring the potential of implementing a blockchain, which is beginning to bear fruit for JP Morgan today.
The bank’s stance on Bitcoin, in particular, has been similar to certain levels of contradiction. For instance, in 2017, the entity operated with assets correlated with bitcoin, even though its CEO had classified the cryptocurrency as a fraud.
More recently, in May of this year, JP Morgan analysts published a report claiming that bitcoin was at least 25% below its intrinsic value. Now, the initially critical bank has finished turning its vision around, and just over a month ago, it referred to bitcoin as “the gold competition” in a newsletter.
JP Morgan Bank: what are its goal, and its recent positions about Bitcoin.
J.P. Morgan is a global leader in financial services, offering solutions to the world’s most important corporations, governments, and institutions in more than 100 countries. This bank also leads volunteer service activities for employees in local communities by using many resources, including those that stem from access to capital, economies of scale, global reach, and expertise.
After being critical of bitcoin, JP Morgan has gradually changed its attitude. On October 24, the favorable position of this investment bank about bitcoin came to light, ensuring that this cryptocurrency has the great long-term potential to compete with gold. The main reason for this competitive strength of bitcoin, says JP Morgan, is in the incorporation of millennials as a key group of investors.
By Jenson Nuñez
