Since cryptocurrency is still in its early years, something new is always around the corner. Bitcoin still reigns supreme in the crypto scene, but more powerful players are starting to join the fray. Recently, J.P. Morgan—one of the world’s biggest investment banks—threw its hat in the crypto ring with JPM Coin and Onyx, a new digital currency and business unit to support it, respectively.
What is JPM Coin?
In late October, J.P. Morgan announced that its digital currency, JPM Coin, was used commercially for the first time that week by a large tech company that sent payments around the world. With this move, J.P. Morgan launched the very first cryptocurrency utilizing blockchain technology backed by a U.S. bank.
Considering cryptocurrencies are generally sourced, mined, and dealt with by private organizations and individuals, this is a significant milestone. Using the JPM Coin, organizations and institutions can make immediate payments digitally safely and securely. You can use it to pay bills, make online purchases, and much more. J.P. Morgan itself guarantees the new cryptocurrency’s value and integrity, lending to its credibility and authority.
How Does JPM Coin Differ From Others?
The JPM Coin has some distinct traits that make it a standout from other cryptocurrencies. The most significant and obvious difference is that JP Morgan itself backs up this cryptocurrency. Having a strong track record in security, innovation, controls, and a strong balance sheet makes JP Morgan arguably the best guarantor option out there.
The valuation of the JPM coin is also an essential factor to keep in mind. Unlike other cryptocurrencies that hold an intrinsic value (meaning the value can fluctuate based on various factors), the JPM Coin is a redeemable fiat currency with a 1:1 collateral value against J.P. Morgan’s reserves. The stable and consistent valuation makes it a safer choice to use in transactions, especially large ones.
Relying on the results of limited testing that’s currently running, they developed the JPM coin primarily to keep financial institutions, such as brokers, dealers, and banks in mind. That forms a stark contrast with common cryptocurrencies like Bitcoin, which focus on individual customers. J.P. Morgan estimates that with the JPM coin, transaction costs might drop by up to 75 percent.
Another significant difference between JP coin and other cryptocurrencies is the way users can access it. Commonly used cryptocurrencies tend to rely on public blockchains with open access, though there are a few exceptions. While it’s difficult to hack cryptocurrencies, it’s not an impossible feat for an expert hacker.
J.P. Morgan hopes to overcome this issue by using permitted blockchain technology that adds an extra layer of security. Only clients who pass Know Your Client (KYC)requirements can run transactions with this new cryptocurrency.
What Else Do I Need to Know?
Despite still being in the early phase, it’s quite evident that J.P. Morgan could have a massive impact on the crypto scene in the years to come. J.P. Morgan is a well-known and respected banking entity, which may make skeptical investors feel more comfortable engaging with cryptocurrency. Onyx, J.P. Morgan’s blockchain division of the bank, currently spearheads the operations for the JPM Coin.
If the announcement of J.P. Morgan’s crypto coin has piqued your interest and you want to start trading, you should first review U.S. cryptocurrency tax laws. Just like the industry itself, the standards for cryptocurrency taxation are still in flux. If you aren’t careful, negligence or confusion could lead you to make mistakes that cost you non-compliance penalties.
The IRS treats cryptocurrency as property, meaning you have to pay a capital gains tax, if applicable. If this sounds complicated, you may want to consider hiring a professional. For help, you can work with a cryptocurrency tax accountant. Like regular tax accountants, crypto tax accountants work diligently to track down all your cryptocurrency transactions, ensuring no transaction goes amiss when filing your crypto taxes.
Join the Next Crypto Wave
By launching the JPM coin, J.P. Morgan has become the trailblazer for U.S. bank-backed cryptocurrency. With a trustworthy organization guaranteeing the transactions, now is an opportune time to consider cryptocurrency operations.