From traditional financial institutions like JPMorgan Chase to crypto-native enterprises like Circle, participants from different backgrounds are actively laying out the on-chain financial ecosystem.
Written by: Tiger Research
Translated by: AididiaoJP, Foresight News
Summary
JPMorgan Chase begins issuing deposit tokens on public chains, overlaying blockchain technology onto the existing financial order.
Circle applies for a trust bank license, attempting to build a new financial order based on technology.
Two types of institutions are attacking traditional finance from different directions, forming a 'bilateral convergence' trend.
The ambiguity of value positioning may weaken each party's competitive advantage, necessitating a clear identification of core advantages and finding a balance point.
A new competitive landscape for on-chain financial infrastructure.
Blockchain technology is reshaping the fundamental architecture of global financial infrastructure. According to the latest report from the Bank for International Settlements (BIS), by the second quarter of 2025, the scale of global on-chain financial assets has surpassed $4.8 trillion, with an annual growth rate exceeding 65%. In this wave of transformation, traditional financial institutions and crypto-native enterprises are showing completely different development paths:
Traditional financial institution represented by JPMorgan Chase
Adopt a gradual reform strategy of 'Blockchain +', embedding distributed ledger technology into the existing financial system. Its blockchain division Onyx has served over 280 institutional clients, with an annual transaction volume of $600 billion. The recently launched JPM Coin has a daily settlement volume exceeding $12 billion.
Crypto-native enterprise represented by Circle
Constructed a fully blockchain-based financial network through the USDC stablecoin. Currently, USDC's circulation has reached $54 billion, supporting 16 mainstream public chains, with an average daily transaction volume of over 3 million.
Compared to the fintech revolution of the 2010s, the current competition shows three significant differences:
The focus of competition shifts from user experience to infrastructure reconstruction.
Technical depth descends from the application layer to the protocol layer.
Participants shift from complementary relationships to direct competition.
JPMorgan Chase: Technological innovation within the traditional financial institutional framework.
JPMorgan Chase has applied for a trademark for its deposit token 'JPMD'.
In June 2025, JPMorgan Chase's blockchain division Kinexys began trial operation of the deposit token JPMD on the public chain Base. Previously, JPMorgan Chase mainly applied blockchain technology through private chains, but this time it directly issues assets and supports circulation on an open network, marking the beginning of traditional financial institutions directly operating financial services on public chains.
JPMD combines characteristics of digital assets with traditional deposit functions. When customers deposit US dollars, the bank records the deposit on its balance sheet while issuing an equivalent amount of JPMD on the public chain. The token can circulate freely while retaining the legal right to claim against bank deposits; holders can exchange it 1:1 for US dollars and may enjoy deposit insurance and interest income. Existing stablecoin profits are concentrated among issuers, while JPMD creates a differentiated advantage by granting users substantial financial rights.
These characteristics provide highly attractive practical value for asset management institutions and investors, potentially even overlooking some legal risks. For example, if on-chain assets like BlackRock's BUIDL fund use JPMD as a redemption payment tool, they can realize 24/7 redemptions. Compared to existing stablecoins that require separate conversion to fiat currency, JPMD supports instant cash conversion while offering deposit protection and interest income opportunities, holding significant potential in the on-chain asset management ecosystem.
JPMorgan Chase's launch of the deposit token is to respond to the new cash flow and income structure formed by stablecoins. Tether's annual revenue is about $13 billion, and Circle creates considerable income by managing safe assets such as government bonds. Although these models differ from the traditional loan-deposit interest margin, their mechanism of generating income based on customer funds is similar to some banking functions.
JPMD also has limitations: its design strictly follows the existing financial regulatory framework, making it difficult to achieve complete decentralization and openness of blockchain. Currently, it is only available to institutional clients. However, JPMD represents a pragmatic strategy for traditional financial institutions to enter public chain financial services while maintaining existing stability and regulatory requirements, and it is viewed as a representative case of connecting traditional finance with the expansion of on-chain ecosystems.
Circle: Reconstruction of finance native to blockchain.
Circle has established a key position in on-chain finance through the stablecoin USDC. USDC is pegged to the US dollar at a 1:1 ratio, with reserves in cash and short-term US Treasury securities. With advantages such as low fees and instant settlement, it has become a practical alternative for corporate payment settlement and cross-border remittances. USDC supports real-time transfers 24/7 without the complex processes of the SWIFT network, helping enterprises break through the limitations of traditional financial infrastructure.
However, Circle's existing business structure faces multiple constraints: BNY Mellon custodies USDC reserves, and BlackRock manages asset operations, which delegates core functions to external institutions. While Circle earns interest income, its actual control over assets is limited, and its current profit model is highly dependent on a high-interest rate environment. Circle needs more independent infrastructure and operational authority, which is a prerequisite for achieving long-term sustainability and revenue diversification.
Source: Circle
In June 2025, Circle applied to the Office of the Comptroller of the Currency (OCC) for a national trust bank license, a strategic decision that goes beyond mere compliance needs. The industry interprets this as Circle's transformation from a stablecoin issuer to an institutional financial entity. The trust bank identity will enable Circle to directly manage reserve custody and operations, strengthening its internal control capabilities over financial infrastructure and creating conditions for expanding its business scope, laying the foundation for institutional digital asset custody services.
As a crypto-native enterprise, Circle adjusts its strategy to establish a sustainable operational system within the institutional framework. This transformation requires accepting the rules and roles of the existing financial system, at the cost of reduced flexibility and increased regulatory burdens. The specific authority obtained in the future will depend on policy changes and regulatory interpretations, but this attempt has become an important milestone for measuring the establishment level of on-chain financial structures within the existing institutional framework.
Who will dominate on-chain finance?
From traditional financial institutions like JPMorgan Chase to crypto-native enterprises like Circle, participants from different backgrounds are actively laying out the on-chain financial ecosystem. This is reminiscent of the competitive landscape of the past fintech industry: technology companies cut into the financial industry by internally realizing core financial functions such as payments and remittances, while financial institutions expand their user base and improve operational efficiency through digital transformation.
The key is that this competition breaks the boundaries between the two. A similar phenomenon is emerging in the current on-chain financial field: Circle directly fulfills core functions such as reserve management by applying for a trust bank license, while JPMorgan Chase issues deposit tokens on public chains and expands its on-chain asset management business. Both sides have started from different starting points, gradually absorbing each other's strategies and domains, each seeking a new balance.
This trend brings new opportunities but also contains risks. If traditional financial institutions forcibly mimic the flexibility of technology companies, it may conflict with existing risk control systems. Deutsche Bank suffered billions in losses when implementing a 'digital-first' strategy due to clashes with legacy systems. Conversely, if crypto-native enterprises excessively expand institutional acceptance, they might lose the flexibility that underpins their competitiveness.
The success or failure of on-chain financial competition ultimately depends on a clear understanding of one's own foundation and advantages. Companies must achieve an organic integration between technology and institutions based on their 'unfair advantages'; this balancing ability will determine who the final winner is.
