JPMorgan Chase announced it would launch its native JPMD token on the Base network. The news come just a day after JP Morgan filed a trademark for the JPMD ticker.
JPMorgan Chase made another step toward crypto integration by announcing it would issue its own JPMD token on the Base network. JPMD will represent dollar deposits in the world’s biggest bank, bridging another gap between fiat and crypto.
The pilot JPMD token will also be launched on Coinbase for early tests. The first transaction is expected to happen within days. JPMorgan has already minted tokens in a digital wallet and will deposit them to the crypto exchange, using the Base L2 chain. While Base is open to anyone, the JPMD token will be restricted only to the whitelisted clients of JPMorgan.
For JPMorgan, the new token is the first foray into a crypto ecosystem outside its internal distributed ledger testing. The bank already runs an exclusive access chain, Kinexys Digital Payments, formerly JPM Coin, which allows the bank’s clients to move their funds in the form of tokens.
JPMD will be available for institutional clients
The JPMD asset will be denominated in US dollars and represent deposits in the bank. The asset will be used in a pilot program running for several months and will be available to Coinbase’s institutional clients. The token will not be freely used among users and retail clients.
JP Morgan has also hinted at other currencies, launching additional specialized stablecoins pending regulator approval. The bank will launch its stablecoin as acceptance of digital dollar-denominated assets is growing. The launch arrives just a week after the Genius Bill on stablecoins passed a key vote and headed to the US Senate.
Deposit tokens are not totally similar to stablecoins, as they represent a deposit claim against a commercial bank. They are a digital version of the deposits belonging to customers, hence fully backed by fiat. The JPMD asset will be the first instance of tokenizing direct bank deposits on a public blockchain, in this case, the widely used Base.
“From an institutional standpoint, deposit tokens are a superior alternative to stablecoins,”
said Naveen Mallela, global co-head of the bank’s blockchain division.
Unlike stablecoins, the deposit tokens can also bear the same interest as the deposit. The bank’s idea is that the JPMD asset will target users who are looking for an alternative to stablecoins produced by a commercial bank. Currently, stablecoins may have trouble securing banking services and showing proof of deposits, which would be trivial for JPMorgan.
JP Morgan manages roughly $10T transactions daily, of which $2B go through its native chain. Adopting Base will give the bank another access to a public network with minimal costs and a chance to connect to the wider Ethereum ecosystem, as well as Coinbase’s institutional user base. The bank will continue to grow its Kinexys network, with a different user base.
The bank has tested multiple on-chain payment techniques and believes deposit tokens may become a widely used form of money for the digital ecosystem. Currently, transferring fiat into stablecoins is not always smooth for either retail or institutional investors, with each stablecoin having different requirements. With deposit tokens, the bank’s clients may easily find their balance on Coinbase.
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