To date, only clients of JP Morgan used its JPM Coin, mainly for cross border payments. Now Bahrain’s Bank ABC has soft-launched instant blockchain-based payments using JP Morgan’s Coin Systems. The solution will initially be used for Bahrain and US payment corridors, as well as the UK, Singapore and Hong Kong.
JP Morgan described it as a “first of its kind commercial payment offering between J.P. Morgan and Bank ABC using distributed ledger rails. This enables cross-border commercial transactions to be executed between Bahrain and US corridors instantly, atomically and with certainty,” said Naveen Mallela, Global Head of Onyx Coin Systems.
In early 2022 the Central Bank of Bahrain (CBB) announced a trial of JPM Coin in conjunction with Bank ABC and its client Aluminium Bahrain (ALBA). It aimed to enable ALBA to make real-time US dollar payments to suppliers in the United States that have JP Morgan bank accounts.
ABC said it plans to use the solution for high value payments, enabling faster, cheaper settlement. For large corporates, it also supports real time treasury management. The euro and additional locations are in the pipeline.
“This initiative aligns with the CBB’s strategic vision to embrace innovation and digitalize the Kingdom’s financial services sector by eliminating inefficiencies that exist in traditional cross-border payment rails, facilitating trade between Bahrain and the U.S., and thereby inducing economic activity,” said His Excellency Rasheed AlMaraj, Governor of the Central Bank of Bahrain.
In order to make a blockchain-based payment, the system moves the funds into a separate account. Then they are tokenized for use on the private permissioned DLT system.
JP Morgan’s digital currency, deposit token initiatives
JP Morgan’s blockchain and digital currency division, Onyx, developed the JPM Coin system. The bank considers JPM Coin as supporting “blockchain-based bank accounts” rather than deposit tokens. The terms deposit tokens and tokenized deposits are used rather loosely. With deposit tokens, there’s less of a linkage to specific customer bank accounts.
JP Morgan is a co-founder of Partior, the DLT network for interbank cross border payments. The bank also participated in Project Guardian which used public blockchain deposit tokens for foreign exchange.
Earlier this month Bloomberg reported that JP Morgan was planning cross border deposit tokens, provided it received regulator approval.