Written by: Tiger Research.
Translated by: AididiaoJP, Foresight News.
Summary
JPMorgan Chase begins issuing deposit tokens on public chains, layering blockchain technology onto the existing financial order.
Circle applies for a trust bank license, attempting to build a new financial order on a technological basis.
Two types of institutions are attacking traditional finance from different directions, forming a 'dual convergence' trend.
The ambiguity in value positioning may weaken their respective competitive advantages, necessitating a clear identification of core strengths and finding a balance.
The new competitive landscape of 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 dollars, with an annual growth rate maintaining above 65%. In this wave of transformation, traditional financial institutions and crypto-native enterprises exhibit markedly different development paths:
Traditional financial institution represented by JPMorgan Chase.
Adopting a gradual reform strategy of 'blockchain +' by embedding distributed ledger technology into the existing financial system. Its blockchain unit Onyx has served over 280 institutional clients, processing a transaction volume of 600 billion dollars annually. The recently launched JPM Coin has an average daily settlement volume exceeding 12 billion dollars.
Crypto-native enterprise represented by Circle.
Through the USDC stablecoin, a fully blockchain-based financial network has been constructed. Currently, the circulation of USDC reaches 54 billion dollars, supporting 16 mainstream public chains, with daily transaction counts exceeding 3 million.
Compared to the fintech revolution of the 2010s, the current competition shows three significant differences:
The focus of competition is shifting from user experience to infrastructure reconstruction.
Technological depth has sunk from the application layer to the protocol layer.
Participants are shifting from a complementary relationship 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's blockchain unit Kinexys began testing the deposit token JPMD on the public chain Base. Previously, JPMorgan primarily applied blockchain technology through private chains, and this direct issuance of assets on an open network and support for circulation marks the beginning of traditional financial institutions operating financial services directly on public chains.
JPMD combines characteristics of digital assets with traditional deposit functions. When clients deposit US dollars, the bank records the deposits on its balance sheet while issuing an equivalent amount of JPMD on the public chain. This token can circulate freely while retaining the legal claim to the bank deposit, allowing holders to exchange 1:1 for US dollars and possibly enjoy deposit insurance and interest earnings. Existing stablecoin profits are concentrated in the issuer, while JPMD forms a differentiated advantage by giving users substantial financial rights.
These characteristics provide very attractive practical value for asset management institutions and investors, even allowing for the overlooking of some legal risks. For example, if on-chain assets like BlackRock's BUIDL fund use JPMD as a redemption payment tool, they can achieve 24/7 redeemability. Compared to existing stablecoins that require separate conversion to fiat currency, JPMD supports instant cash conversion, while also providing deposit protection and interest earning opportunities, holding significant potential in the on-chain asset management ecosystem.
JPMorgan Chase's launch of deposit tokens is to respond to the new flow of funds and revenue structure formed by stablecoins. Tether generates approximately 13 billion dollars in annual revenue, while Circle also creates substantial returns through managing safe assets such as treasury bonds; although these models differ from traditional deposit and loan interest spreads, their mechanism for generating income based on customer funds is similar to some bank functions.
JPMD also has limitations: its design strictly follows the existing financial regulatory framework, making it difficult to achieve complete decentralization and openness in blockchain; it currently targets only institutional clients. However, JPMD represents a pragmatic strategy for traditional financial institutions to enter public chain financial services while maintaining existing stability and compliance requirements, regarded as a representative case connecting traditional finance with the expansion of on-chain ecosystems.
Circle: Financial reconstruction native to blockchain.
Circle has established a key position in on-chain finance through the stablecoin USDC. USDC is pegged 1:1 to the US dollar, with reserves in cash and short-term US Treasury bonds. With technological advantages like low fees and instant settlement, it has become a practical alternative for corporate payment settlements and cross-border remittances. USDC supports real-time transfers 24/7 without the complex processes of the SWIFT network, helping businesses break through the limitations of traditional financial infrastructure.
However, Circle's existing business structure faces multiple constraints: BNY Mellon holds USDC reserves, and BlackRock manages asset operations, which delegates core functions to external institutions. Although Circle earns interest income, its actual control over assets is limited, and the current profit model heavily relies on a high-interest rate environment. Circle needs a more independent infrastructure and operational authority, which is a necessary condition 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 transcends mere compliance needs. Industry interpretation sees this as Circle's transformation from a stablecoin issuer to an institutional financial entity. The trust bank identity will allow Circle to directly manage reserve custody and operations, strengthening its internal control capability over financial infrastructure and creating conditions for expanding its business scope, laying the foundation for Circle's 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 burden. The specific rights obtained in the future will depend on policy changes and regulatory interpretations, but this attempt has become an important milestone to measure the establishment 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 evokes memories of the competitive landscape of the past fintech industry: tech companies entered the financial sector by achieving core financial functions such as payments and remittances internally, while financial institutions expanded user bases and improved operational efficiency through digital transformation.
The key is that this competition breaks the boundaries between both parties. Similar phenomena are 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 issues deposit tokens on public chains and expands on-chain asset management business. Both parties start from different starting points and gradually absorb each other's strategies and fields, each seeking a new balance.
This trend brings new opportunities but also contains risks. If traditional financial institutions forcefully mimic the flexibility of tech companies, they may conflict with existing risk control systems. When Deutsche Bank implemented a 'digital-first' strategy, it suffered losses amounting to billions of dollars due to clashes with legacy systems. Conversely, if crypto-native enterprises excessively expand their institutional acceptance, they may lose the flexibility that supports their competitiveness.
The success or failure of on-chain financial competition ultimately depends on a clear understanding of its own foundation and advantages. Enterprises must achieve organic integration between technology and systems based on their 'unfair advantages'; this balancing ability will determine who the ultimate winner is.
