During a session at the Coindesk Consensus event, the digital asset leaders at JP Morgan and Citi discussed the status and advantages of digital currency and blockchain bank accounts. Citi’s Ryan Rugg said its clients want always on, multi bank and cross border access to money. Umar Farooq, who heads Onyx by JP Morgan, argued that the current system isn’t broken but has limitations.
“One of the macro limitations is silos. So money is in a silo, securities are in a silo, commodities (are in a silo). You can just go across asset classes, everything lives in its own silo. And those silos don’t easily talk to each other. That’s why a lot of the settlement might take a day or two or longer,” said Mr Farooq.
He added, “It’s probably less about fixing the problems of today but enabling the use cases of tomorrow.”
JP Morgan officially launched JPM Coin in late 2020. It likes to refer to it as a blockchain-based bank account rather than a tokenized deposit. Initially it focused on the 24/7 aspect. While this appeals to multinational firms, they’re also not that keen on transactions in the middle of the night because nobody’s in the office.
Programmability is driving adoption
Hence, pushing 24/7 has only gotten JPM Coin so far. JPM Coin was not programmable from the start, and it only launched that functionality late last year.
“We’ve seen the number of transactions explode by factors of ten, if not hundreds,” said Mr Farooq. “Fewer larger transactions, lots of smaller transactions.” On some days the transaction volumes reach the high single-digit billions of dollars.
And that’s driven by programmability. It’s not just the payments or treasury department that’s keen, but the core business.
He gave an example of an industrial printer that gets paid every time the machine prints. While that may sound like an obscure application, Siemens has been the lighthouse client for JPM Coin, and it makes industrial printers. The German company has been an early blockchain adopter, particularly in finance. It was the first corporate to say it was using the dollar JPM Coin, the euro version and programmability.
Citi implemented programmable payments for one of the first pilot clients to use its Citi Token Services. Maersk automatically released funds using the tokens when one of its ships was refueled.
Citi is involved in Singapore’s Global Layer One
One other piece of news is that Citi is participating in Singapore’s Global Layer One (GL1) work. The Monetary Authority of Singapore launched the project as part of its Project Guardian blockchain and tokenization initiative. It aims to provide an open, digital infrastructure which is international. Initial participants were BNY Mellon, JP Morgan, DBS and MUFG.
Citi’s participation is highly relevant as it was the first to articulate the concept that underpins the Regulated Liability Network, which is similar to the GL1 and the Unified Ledger but pre-dates both. Few details have been released so far about the GL1 work.
Mr Farooq described GL1 as “globally permissioned. Somewhere between the public infrastructure of today and the permissioned infrastructures owned by banks.”
