Innovation is a funny thing. It often arrives with an excess of hype and then fades into disappointment—before reemerging in full bloom. A case in point is JPMorgan Chase's "JPM Coin," a corporate stablecoin launched shortly after the 2017 crypto bubble that seemed doomed to languish as a proof of concept that would never catch on in the real world.
In recent weeks however, the story around JPM Coin has changed dramatically as the bank announced that it is notching daily transaction volumes above $1 billion and that its big corporate clients are finally tapping into the coin's promise to provide "programmable" money.
If you're unfamiliar with JPM Coin, it's a digital dollar that the bank created on a private version of the Ethereum blockchain. This means that clients with access to the coin (or ones like it) can enjoy the benefits of crypto technology—including 24/7 transactions and smart contracts—within a secure corporate environment. Well, that's how it's supposed to work in theory.
In reality, the past six years have been marked by a series of announcements involving banks and companies saying they've carried out a blockchain transaction—involving dollars or equities or commodities—and that's been the end of the matter. While the transactions did occur, they didn't really matter since they were mostly one-off events that didn't lead to any changes in day-to-day commerce.
This has quietly begun to change, however, as companies have moved past the PR phase of blockchain and started tapping into its actual benefits. I spoke with Naveen Mallela, the head of coin systems (yes, that's a title) at JPMorgan Chases's Onyx unit, and he explained that the likes of Siemens, Cargill, and FedEx are all using these tools in daily operations.
Mallela told me that customers are viewing JPM Coin less as a stablecoin than as a tool to manage commercial deposits and take advantage of programmable money. I pushed him on that, asking what exactly he means by programmable. He explained that it means creating automated instructions for funds you control. A primitive illustration is autopay for bills but, thanks to blockchain, companies can now carry out far more sophisticated operations.
Mallela gave three persuasive examples of programmable money in action: companies using blockchain to carry out cash sweeps that used to happen once a day, but that can now occur anytime; finance firms using smart contracts to monitor and address margin calls for securities; and companies arranging for shipping payments to be released at various stages of a voyage.
By relying on smart contracts to handle these operations, companies can deploy cash and staffing resources more efficiently. And this is likely only the beginning. Mallela notes that IFTTT ("if this, then that") instructions are becoming commonplace in the corporate blockchain environment and that companies will find more and more ways to use them.
Meanwhile, programmable money is sprouting up in the investment sector as well—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 to do the same in the U.S. All of this shows that while blockchain-based finance is still far from mainstream, it has quietly taken a giant leap forward.
Jeff John Roberts
jeff.roberts@fortune.com
@jeffjohnroberts
