JPM's digital token; Face-recognition ATMs

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Editor's note: Morning Scan will not publish on Monday, Feb. 18, in observance of Presidents’ Day. We’ll be back on Tuesday, Feb. 19.

Receiving Wide Coverage ...

A first for Chase
A year after CEO Jamie Dimon called bitcoin a “fraud,” JPMorgan Chase “became the first major United States bank to introduce its own digital token for real-world use, the latest step in Wall Street’s evolving approach to blockchain technology.”

However, “the bank’s token is unlikely to shake up the financial system anytime soon,” the New York Times said. “Because it will be run by JPMorgan, it lacks the fundamental qualities that have made cryptocurrencies so radical: the freedom from middlemen and from regulatory oversight.” Each JPM Coin will be backed by a dollar, meaning they won’t “be subject to the wild price volatility that has drawn speculators to other cryptocurrencies.”

The bank plans to use the system “to expedite dollar-based payments for its corporate banking clients, making it one of the first global banks to incorporate digital coin technology into its core business,” the Financial Times said. “The technology will facilitate near-instantaneous settlement of these money transfers and will, according to the bank, mitigate counterparty risk.” Financial Times, American Banker here and here

However, Signature Bank, a much smaller New York bank, says it beat JPM to the punch by “nearly two months.” Since launching at the beginning of this year, the bank’s blockchain-based Signet system “has on-boarded more than 100 clients who are using it to send each other millions of dollars a day,” bank executives told CoinDesk. “We can say there are trades going on in the millions some days and tens of millions other days and I would say the number of clients we have is in the triple digits,” CEO Joseph J. DePaolo said.

American Banker takes a look at how other JPM rivals will respond, and 5 things JPM Coin will do for banking and blockchain.

Separately, HSBC said it “has reduced the cost of settling foreign exchange trades by a quarter through its blockchain-based system, offering a glimpse of the savings the technology could offer banks.”

Facing the music
Roger Ng, a former Goldman Sachs banker implicated in the 1MDB fraud in Malaysia, is planning to waive extradition and return to the U.S. to face criminal charges. He plans to plead not guilty to charges he helped launder money and bribe government officials. New York Times, Wall Street Journal

Wall Street Journal

About face?
Mark Calabria, President Trump’s nominee to head the Federal Housing Finance Agency, told the Senate Banking Committee at his confirmation hearing Thursday that “he would work to preserve the popular 30-year mortgage, a product he has criticized in the past.” He also said “he would scrutinize big banks if confirmed, using his seat on a panel of regulators, the Financial Stability Oversight Council, to raise concerns about risks the largest firms pose to the financial system. A critic of big banks, Mr. Calabria said he disagreed with the 2008 federal bailout plan known as TARP.” Also: American Banker

Going up
Visa and Mastercard are set to increase several card processing fees in April, “a move likely to inflame already fractious relations between many businesses and card networks.” Charges set to increase include interchange fees and the fees financial institutions pay for the networks to process payments on behalf of merchants.

Financial Times

Smile for the camera
CaixaBank, Spain’s largest retail bank, said it is the first bank to install facial recognition technology at its ATMs, allowing customers to withdraw cash without a PIN. The bank said that 20 ATMs in Barcelona already have the technology, with the system to be rolled out throughout Spain this year. The bank has over 9,400 cash machines. “To use the new ATM technology, customers first have to register and be photographed at a CaixaBank branch.”

Big tech risks
The Financial Stability Board said the influx of big technology firms such as Google, Amazon, Apple and Microsoft into the financial services business “could do more to disrupt the sector than niche challengers, and may pose fresh threats to financial stability.” The board, which recommends financial regulations to the G20 nations, said the big tech firms “could ‘materially alter’ financial services much more than specialist financial-technology companies, and that incumbents may have to take bigger risks to keep up.”

Quotable

“It is indeed possible for us to have a well capitalized, strong system that preserves the 30-year mortgage.” — Mark Calabria, President Trump’s nominee to head the Federal Housing Finance Agency, at his confirmation hearing before the Senate Banking Committee.

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