According to The Block, JPMorgan plans to test its dollar deposit token JPMD on the Ethereum layer-2 network Base, incubated by Coinbase.
A JPMorgan spokesperson told The Block that the bank plans to issue JPMD on the Base chain and expects to conduct the first transaction through the bank's wallet "in the coming days."
Base officially wrote on social media platform X on Tuesday:
"JPMorgan chose Base to provide its clients with a sub-second, less than one cent trading experience, offering institutions near-instant settlement and immediate liquidity. Fund transfers should only take a few seconds, not days. Commercial banking is going on-chain."
JPMD is a "permissioned" deposit token aimed at institutional clients, essentially a digital form of deposits in customer bank accounts, which is different from stablecoins. Stablecoins are tokens that are pegged to fiat currencies, typically backed 1:1 by a basket of securities (such as treasury bills) or other high-liquidity assets.
According to Bloomberg, this pilot program may include the bank's institutional clients, is expected to run for several months, and could expand to currencies other than the dollar after obtaining regulatory approval.
Naveen Mallela, global co-head of JPMorgan's blockchain division Kinexys, stated: "From an institutional perspective, deposit tokens are a better alternative than stablecoins, as they are built on a fractional reserve banking system, we believe they are more scalable."
Mallela stated that potential advantages of deposit tokens like JPMD include possibly becoming interest-bearing assets and being protected by deposit insurance, advantages that mainstream stablecoins currently lack. Mallela also mentioned in an interview with CNBC that institutions will be able to use JPMD for on-chain digital asset settlement and cross-border B2B transactions.
Related reports: (JPMorgan files trademark application for digital asset platform JPMD, which may involve services like trading, transfers, and payments) (Bitcoin enters Wall Street financing system! JPMorgan plans to allow the use of Bitcoin ETF as collateral for loans)
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