JPMorgan picks up one of crypto's basest tricks

Chris Dannen

By Chris Dannen

USD-backed "stablecoins" are great for the issuers and terrible for users; now the big blue bank will see if any of its biggest customers are willing to fall for the ruse. For users, as with other USD-backed stablecoins, the first step to using the JPM coin is depositing USD. (It's unclear whether such a reserve account would be interest-bearing at JPM, but they are not on other platforms.) Once value is conferred into token form, detailed information about transactions are available to the host of the system. If these transactions are solely between the client and JPM, then that's no big deal; but if these "Jamie coins" are meant for broader use amongst institutions, that's another story. If the world has learned anything from Facebook's growign profitability, it's that behavioral data is highly monetizable--for reasons both legitimate and nefarious. For a business of any scale, especially a financial business or investment manager, transaction patterns should not be given away in exchange for some added measure of convenience. Real innovation in financial infrastructure is to be found in Bitcoin, which is poised to become ideal collateral for an open, global, and digitally-native financial system--see The Block's assessment below.

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