JPMorgan Introduces Onyx
When you think about cryptocurrencies and blockchain you probably don't initially think of Wall Street's biggest banks.
Of all the major banks on Wall Street, J.P. Morgan may stand out as the one that has made the most progress in the space. Ironically, it's JPMorgan Chase's very own Chairman and CEO Jamie Dimon who once called bitcoin a fraud, then subsequently said he regretted it and "the blockchain is real."
JPMorgan Chase became the first major U.S. bank to launch a cryptocurrency last year with its JPM Coin, which is a digital token for instantly settling payments between clients in its wholesale payments business.
JPMorgan Chase's global head of wholesale payments Takis Georgakopoulos said JPM Coin is being used this week by a technology company to send payments globally, marking the first commercial use of the digital currency.
As JPM Coin gets put to commercial use and the company works on other related initiatives, JPMorgan Chase has decided to create a dedicated business unit called Onyx for its blockchain and digital currency efforts. Georgakopoulos told CNBC the unit already has more than 100 employees.
"We are launching Onyx because we believe we are shifting to a period of commercialization of those technologies, moving from research and development to something that can become a real business," Georgakopoulos said.
Georgakopoulos said the initiative could lead to hundreds of millions of dollars in savings in the wholesale payments market, where JPMorgan is one of the largest players as it moves $6 trillion a day across more than 100 countries. Georgakopoulos believes expensive fees as a result of payments that are rejected because of errors with account information could be prevented.
Onyx also wants to make sending and receiving paper checks a thing of the past through an exchange that posts the digital information contained on a check and completes the transaction almost instantly. The initiative is months away from commercial launch, according to Onyx CEO Umar Farooq.
"We're talking about hundreds of millions of checks being sent," Georgakopoulos said. "Using a version of blockchain with the participants being the main issuers of checks and the main operators of lockboxes, it's possible we can save 75% of the total cost for the industry today, and make checks available in a matter of minutes as opposed to days."
Dimon's enthusiasm for Onyx appears to be much greater than for bitcoin, as he said "Onyx is at the forefront of a major shift in the financial services industry. This new business unit reflects J.P. Morgan's commitment to innovation as we continue to build cutting-edge technology that delivers a better, faster and more inclusive financial system."
As cryptocurrencies are back in the news with bitcoin hitting its highest level since June of last year, J.P. Morgan is ready to turn its years of research into cryptocurrencies and blockchain into a formidable business.
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