JPMorgan Chase & Co. has become the first leading U.S. bank to move into digital currency with today’s launch of JPM Coin, a so-called “stablecoin” tied to the U.S. dollar.

Designed to facilitate payments between clients, JPM Coin is powered by JPMorgon’s Quorum blockchain, itself a variant of the Ethereum blockchain. Each coin is guaranteed by the company to be redeemable for $1, the amounts relative to the number of coins issued held in reserve by the bank.

Trials using JPM Coin are set to start in a few months, initially to facilitate a “tiny fraction” of JPMorgan’s $6 trillion in daily transactions. If the trial is successful, the bank will then scale up the service.

“So anything that currently exists in the world, as that moves onto the blockchain, this would be the payment leg for that transaction,” Umar Farooq, head of J.P. Morgan’s blockchain projects, told CNBC. “The applications are frankly quite endless; anything where you have a distributed ledger which involves corporations or institutions can use this.”

Whether JPM Coin counts as a cryptocurrency, however, is open to some debate.

“It’s important to note that JPM Coin isn’t exactly crypto; rather, it’s a financial instrument that leverages blockchain technologies,” Kevin McMahon, executive director of emerging technologies SPR Inc., told SiliconANGLE. “Just like bitcoin, JPM Coin can be thought of as an application written on top of a blockchain platform.”

Referencing JPMorgan Chief Executive Officer Jamie Dimon’s previous expressed disdain for cryptocurrencies, McMahon noted nonetheless that there aren’t any inconsistencies between Dimon’s previous comments and JPMorgan’s foray into distributed ledger technologies and applications, because JPM Coin isn’t a true cryptocurrency.

“It’s not intended to replace or even compete with cryptos like bitcoin,” McMahon added. “This is an application of distributed ledger technologies to improve specific business cases that JP Morgan and its institutional clients have.”

Cryptocurrency or not, the JPM Coin announcement has immediately drawn a comparison to Ripple Labs Inc., which offers the XRP stablecoin that’s meant to serve similar purposes: enabling the transfer of funds among banks, individuals and businesses.

“This is a huge slap in the face for Ripple,’’ Tom Shaughnessy, principal at Delphi Digital, told Bloomberg. “Ripple’s target market is cross-border payments and remittances and now JPMorgan’s effort is a direct threat.’’

Ripple CEO Brad Garlinghouse bit back, writing on Twitter “as predicted, banks are changing their tune on crypto. But this JPM project misses the point – introducing a closed network today is like launching AOL after Netscape’s IPO. 2 years later, and bank coins still aren’t the answer.”

Photo: dahlstroms/Flickr