JPMorgan’s dive into the world of blockchain and digital assets is getting deeper with its blockchain arm Onyx eyeing expansion of its coin system to include sterling as a third currency after the US dollar and the euro to settle cross-border payments.
But JPMorgan’s now forward-looking approach towards blockchain and digital assets wasn’t the same as a few years ago. JPMorgan CEO Jamie Dimon called bitcoin a fraud in September 2017 and said that the digital asset would “blow up”. At the time, bitcoin was trading at around $4,000 compared with $37,000 now.
Amid growing retail and institutional interest in blockchain and digital assets, JPMorgan started softening its approach and eventually launched Onyx to focus on the emerging technology and asset class.
Onyx’s coin system, known as the JPM Coin, has processed more than $300bn in US dollar and euro transactions over the last three years.
The firm is now planning to support settlements in sterling, the world’s fourth-largest currency in terms of trading volumes, to expand its network of banks that support JPM Coin.
“Our plan regarding JPM Coin is to expand across currencies, and GBP is by definition one of the major currencies. We are definitely looking at GBP,” Onyx CEO Umar Farooq told Financial News.
Onyx is also in talks with more than a dozen banks that are interested in using JPM Coin for cross-border transactions, he said.
However, integrating blockchain technology into existing financial systems is a challenge on its own.
“When you do things at scale with blockchain technology, you see that money-saving may not always be there, at least for now. The expense is not only about running the blockchain, the expense is also about connecting the technology to everything in the existing system,” Farooq said.
Talking about challenges, the fintech sector is going through a lot of them and one is the funding drought.
Fintechs’ IPO fuss
Fintechs know all too well that initial public offerings are no easy option for the firms struggling to raise funds.
With European fintech funding plunging 70% in the first half of 2023, firms may have been thinking of IPOs as an option to raise funds. But investors’ preference for holding on to cash and surging competition from artificial intelligence have already made the sector less attractive.
“An IPO can amplify interest in fintech firms, but it’s not a silver bullet. It demands transparency and a track record of performance,” says Roger Buerli, chief executive of Swiss fintech Brighty App.
PayPal’s UK crypto plan
PayPal has been able to secure crypto approval from the Financial Conduct Authority. PayPal, which announced a pause to its crypto purchases in the UK until 2024 amid stricter regulations earlier in the year, was able to get its registration on 31 October.
PayPal becomes only the fourth firm this year to receive the FCA’s approval. Between January 2020 and 6 October 2023, the FCA received 326 crypto registration applications. Only 43 scored registration — a 14% approval rate.
In other news
Revolut appoints senior banking and fintech expert as UK CEO
Sam Bankman-Fried is convicted of fraud in FTX collapse
Microsoft president praises ‘decisive’ competition watchdog after Activision deal drama
Most influential in trading and technology
Financial News has published its inaugural list of the most influential figures in trading and technology. London Stock Exchange CEO Julia Hoggett, Euronext CEO Stéphane Boujnah, and SIX Group CEO Jos Dijsselhof made the cut along with other prominent names.
Have your say
Financial News is asking readers to weigh in on the key debates ahead of COP28. Take our ESG survey.
Recommended reading
Big tech ditched trust and safety. Now startups are selling it back as a service (Wired)
Regulators are cracking down on banking software startups. That’s bad news for Europe’s fintechs (Sifted)
Budget cuts, layoffs add to pressure on cyber teams (The Wall Street Journal)
To contact the author of this story with feedback or news, email Bilal Jafar
