I wrote this a while ago when this was first mentioned: “JP Morgan says that it is trialling crypto-currency and blockchain in order to speed up payment transf

I wrote this a while ago when this was first mentioned: “JP Morgan says that it is trialling crypto-currency and blockchain in order to speed up payment transfers, as well as reducing clients' counterparty and settlement risk, and decreasing capital requirements.” Is a pretty frightening thing to read. Specifically, the way that sentence reads, JP Morgan would be issuing coins to reduce capital requirements…which means either: The journalist is confused, and they are using blockchain to speed up payment speeds which reduces risk, and the lower risk is what reduces capital requirement. in essence, faster transactions and settlement allows lower leverage/short term borrowing and therefore a slightly reduced capital buffer. They are issuing the coin as a security, which means the coin is actually raising capital. And so the sentence should say it reduces other capital requirements. They are issue the coin as “corporate points” which are redeemable for money from JPM, but which others cannot actually treat like capital. I.e. If I end up with a bunch of JPM coins on my balance sheet, I would treat them as an non-interest-bearing debt instrument? Kind of? I guess it isn’t clear yet, but I presume that these will only be used over short settlement times to facilitate easy transfer but there will be some kind of real money settle up at some point? Holding someone else’s non-interest-bearing loan certificate doesn’t sound that attractive in the long term. But, presumably #1/3 are the likely options because #3 means no new capital is actually generated, and #1 means that it is really transaction speed arbitrage.