Dive Brief:
- Brooklyn, N.Y.-based technology firm ConsenSys has acquired Quorum, the blockchain platform developed by JPMorgan Chase, and rebranded the distributed ledger ConsenSys Quorum, the companies said Tuesday. Reports of a deal first surfaced in February.
- Neither company disclosed financial terms of the deal, but JPMorgan has made a strategic investment in ConsenSys and will continue using it, Joseph Lubin, the tech company’s co-founder, told Reuters.
- The 25 employees on the Quorum team will remain at the bank to work on the transition to ConsenSys over the next year before being redeployed to other blockchain efforts, Umar Farooq, global head of blockchain at JPMorgan, told the wire service.
Dive Insight:
JPMorgan Chase uses Quorum, which it built internally on the Ethereum network, to power its Interbank Information Network (IIN).
The bank launched IIN as a pilot program in 2017, with an eye toward minimizing friction in cross-border transactions by enabling payments to reach beneficiaries faster and with fewer steps. Nearly 400 banks use JPMorgan’s blockchain network, the bank said.
The bank also has been using the platform to test its digital currency, JPM Coin, which it plans to use to settle interbank transfers.
JPMorgan reportedly had been considering spinning off Quorum for up to two years, Reuters reported in February.
“We believe a platform like Quorum could thrive better in the hands of a software and services oriented organization,” Farooq told the wire service Tuesday.
The platform also might more easily grow a wider range of financial institutions as users if it’s not owned by a rival bank, Lex Sokolin, global fintech co-head at ConsenSys, told American Banker.
“It helps more folks come to the table if they can use the technology from a technology firm rather than from a competitor,” he said. “JPMorgan Chase is focusing on what’s valuable to them, which is more the financial application that runs on top of the protocol, rather than maintaining the protocol themselves.”
The nation’s largest bank has deepened its blockchain ties this year, extending banking services in April to two bitcoin exchanges, Coinbase and Gemini. That move signaled a change in tone for CEO Jamie Dimon, who in 2017, called bitcoin “a fraud” and said he would fire anyone at JPMorgan found to be trading in bitcoin “in a second.”