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JPMorgan Chase, Siemens and FedEx show that blockchain finance is more than a buzzword
Innovation is a funny thing. It often arrives with excess hype, then turns into disappointment, before re-emerging in full bloom. A good example is that of JPMorgan Chase: “JPM parta corporate stablecoin launched shortly after the 2017 crypto bubble that seemed doomed to abandonment as a proof of concept that would never catch on in the real world.
However, in recent weeks the story around JPM Coin changed dramatically when the bank announced that it was exceeding daily trading volumes. 1 billion dollars and that its large corporate clients are finally exploiting the coin’s promise of providing “programmable” money.
If you’re not familiar with JPM Coin, it’s a digital dollar that the bank created on a private version of the Ethereum blockchain. This means that customers with access to the coin (or similar coins) can enjoy the benefits of crypto technology, including 24/7 transactions and smart contracts, in a secure enterprise environment. Well, that’s how it’s supposed to work in theory.
In reality, the last six years have seen a series of announcements involving banks and companies claiming to have completed a blockchain transaction – involving dollars, stocks or commodities – and that’s it. Even if the transactions took place, they don’t really matter since they are mostly one-off events that don’t result in any changes in daily trading.
Things have started to change smoothly as businesses have moved beyond the communication phase of blockchain and have started to exploit its real benefits. I spoke with Naveen Mallela, head of coin systems (yes, that’s a title) at JPMorgan Chase’s Onyx unit, and he explained that companies like Siemens, Cargill and FedEx all use these tools in their daily operations.
Mallela told me that customers view JPM Coin less as a stablecoin and more as a tool for managing commercial deposits and profiting from programmable silver. I pressed him on this, asking him what exactly he meant by programmable. He explained to me that this means creating automated instructions for the funds you control. A primitive illustration is automatic bill payment, but, thanks to blockchain, businesses can now carry out much more sophisticated operations.
Mallela gave three compelling examples of programmable money in action: companies using blockchain to conduct treasury transactions that once happened once a day, but can now happen at any time; financial companies using smart contracts to monitor and respond to margin calls on securities; and companies that arrange for shipping payments to be released at different stages of a journey.
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By leveraging smart contracts to manage these operations, companies can more efficiently deploy their cash and personnel resources. And that’s likely just the beginning. Mallela notes that IFTTT (“if this, then that”) instructions are becoming commonplace in the enterprise blockchain environment, and companies will increasingly find ways to use them.
Meanwhile, programmable money is also making an appearance in the investment industry: JPMorgan Chase and Apollo just launched tokenized funds in Singapore, while a startup called Superstate, founded by the creator of the popular DeFi protocol Compound , just raised $14 million do the same in the United States All of this shows that while blockchain-based finance is still far from mainstream, it has quietly taken a giant step forward.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
This story was originally featured on Fortune.com