U.S. Banks Are Getting Into Cryptocurrency Transactions

U.S. Banks Are Getting Into Cryptocurrency Transactions

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Different cryptocurrencies, including bitcoin and ethereum, flourished in traditional crypto-style in the late 2020 and the new year. The big boom in activities has highlighted many banks that cater to crypto-customers to build advanced payment networks and specialty banking products by leveraging blockchain technology.

On several occasions, the digital currencies used in these payment schemes are different from most other coins, such as Bitcoin. The difference is that most of them are "stable coins" proprietary and attached to national currencies. The objective is to reduce uncertainty in comparison with others cryptocurrencies, which have seen significant price fluctuations. According to experts, stable coins' relative reliability expands the usage of cryptocurrencies in daily transactions and a distributed type of currency.

Secondly, the banks generally supply only their clients with the coins, while anybody can buy or sell Bitcoin. Third, the corporations administer and regulate coin trading through a proprietary "permitted" company blockchain; meanwhile, Cryptocurrency trading takes place in a public database that allows everyone to, in principle, take part in verifying and receiving bitcoin transactions by doing so.

Cryptocurrency Support Of U.S. Banks Between Corporate Customers:

JPM Morgan said that it had successfully tested JPM Coin, a new digital coin concept, in February 2019, to send overseas payments to its corporate customers for blockchain purposes. The bank also said the technology would be used for other purposes.

The bank says that transferring money through a blockchain requires a digital currency; it has developed JPM Coin to fulfill that function. Each JPM Coin is a U.S. dollar kept in a bank account. When one bank client sends money over the blockchain to another bank, JPM Coins are exchanged and instantly repaid, minimizing transaction time to the equivalent amount in U.S. dollars. According to one bank, a transaction usually entails a three-step process: first, the company deposits money at the bank and collects the equivalent amount of digital coins; second, coins are used in transactions involving crypto-currency payments through a blockchain network; and second, bank customers can pay coins in dollars.

The bank says it wants to expand the currency over time to other currencies. Payments are made on the Ethereum blockchain's edition but can also be made on other platforms, the bank said.

According to a bank executive cited by CNBC, a significant advantage in using a digital coin would be that overseas bitcoin transfers are paid at every point of the day, in real-time. In comparison, it can take even longer to pay foreign transfers through the conventional corresponding banking networks, including cut-offs for transactions in various countries.

According to the executive cited by CNBC, the bank also considers two other possible use of the coin. One is to substitute for wire transfers where shares are bought. The other is targeted at multinationals using the treasury facilities of the bank. Using crypto-currency, each subsidiary can

reflect cash on its balance sheet without spending money between divisions, giving companies the chance to consolidate their money and improve their prices.

At the end of 2018, after approval by the New York State regulators, Signature Money, another U.S. bank, introduced a blockchain-based payment system for its clients. According to Coindesk, about 100 company customers now make millions of dollars every day for each other's crypto-monetary payments. 8 The Bank reports that the scheme permits business customers with at least $250,000 account balances to deliver each other dollar deposits in real-time, 24 hours a day, without transaction fees. Some of these customers are startups in cryptocurrencies, but they still have a company that uses the green energy platform. Signature's cryptocurrency payment network uses a dollar-bound stablecoin that operates on a propriety Ethereum-based blockchain, Coindesk claims.

In an article of the American Banker, the potential benefits of such crypto-monetary schemes include quicker processing times and fees. Payment technology for cryptocurrency can exclude from the third transaction actors, including payment processors. And, according to the magazine, the fact that technology is supported and the scale is small will make regulators more relaxed.

Japanese Banks Launch Digital Currency Smartphone Payments:

In January 2019, Mizuho Bank, along with approximately 60 other regional domestic banks, launched J-Coin Pay, a mobile digital currency payment portal February 2019. However, according to a Mizuho spokesman quoted by Quartz, the device does not use crypto-monetary or blockchain technologies. Instead, bank customers and companies are allowed through the mobile application and the QR codes to make purchases.

In January 2019, J-Coin Pay, a mobile digital currency payment platform, was unveiled by Mizuho Bank February 2019 with about 60 different regional domestic banks. 12 According to a Mizuho spokesperson cited by Quartz, the system does not use cryptocurrency or blockchain technology. Instead, via the mobile application and QR codes, 13 Bank clients and companies are allowed to shop.

Banks are not only the digital coins and crypto-month transfers exploring organizations. The New York Times reports that major social media sites and email companies use digital amounts of money to deliver payments to other consumers.

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