JPMorgan Launches Deposit Token JPM Coin for Institutional Clients

JPMorgan Chase has started to roll out JPM Coin, a deposit token that represents a claim on existing customer deposits, to its institutional clients. The token will be circulated under the ticker JPMD.

Digital assets meet tradfi in London at the FMLS25.

JPMorgan Aims to Make Banking More Efficient

According to a Bloomberg report, the deposit token will enable the Wall Street giant’s clients to settle transactions in seconds, around the clock, which would otherwise take hours and be restricted to business hours.

The settlements will be done on the public blockchain Base, which is affiliated with Coinbase. Ahead of the recent launch, the bank conducted a trial with JPM Coin over the past few months, which involved firms such as Mastercard, Coinbase and B2C2. It announced its plans to pilot the token last June.

Deposit coins are not stablecoins; instead, they are specifically designed for use in commercial banking. These tokens represent digital claims on funds already in clients’ bank accounts. They can also be interest-bearing, unlike stablecoins.

“We think that stablecoins get a lot of buzz, but for institutional clients, deposit-based products offer a compelling alternative,” Naveen Mallela, Global Co-Head of JPMorgan’s blockchain division, Kinexys, told Bloomberg. “These can be yield-bearing.”

Coinbase will also accept the deposit token as collateral.

Banks See Potential in Blockchain

JPMorgan floated the idea of the deposit token in 2023 to streamline its cross-border payments and settlements. Now, the bank also plans to expand its deposit token initiative further, as it has trademarked the ticker JPME for a potential future launch of a euro-denominated deposit token.

Meanwhile, other banking giants are also exploring the possibility of launching similar deposit tokens. The Bank of New York Mellon and HSBC are among those who have either already launched or plan to launch deposit token services.

Although JPMorgan’s CEO once compared Bitcoin to a Ponzi scheme, the bank has remained at the forefront of adopting blockchain technology. It also operates a network called Kinexys Digital Payments, previously known as JPM Coin, which enables corporate clients to transfer fiat currency.

According to the bank, Kinexys processes an average of over $3 billion in transactions daily. However, the figure is small compared with about $10 trillion of daily volume processed by its payments division.

This article was written by Arnab Shome at www.financemagnates.com.
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