JPMorgan explores new crypto territories with its own deposit token

JPMorgan Chase, the largest bank in the USA, is venturing further into the fascinating world of cryptocurrencies. The financial institution has announced plans to introduce its own digital token named 'JPMD' in collaboration with the crypto exchange Coinbase. Contrary to the expectations of many who anticipated a stablecoin, JPMD is presented as a deposit token. This means it is a digital representation of a bank deposit certificate based on blockchain technology. The partnership between JPMorgan and Coinbase aims to mobilize institutional capital on a global scale and enable around-the-clock settlement of transfers and cross-border B2B payments. The new token will be issued on the public Ethereum-based blockchain called Base. Interestingly, JPMD is specifically designed for institutional clients such as businesses and pension funds. This strategic decision to create a deposit token instead of a stablecoin sets JPMorgan apart from other companies currently incorporating stablecoins into their payment systems. Examples include tech giants like Meta and Google. The difference lies in the respective applications: while stablecoins are primarily used for trading and as a store of value in retail, deposit tokens offer better integration into existing institutional financial systems. Naveen Mallela, the global co-head of JPMorgan's blockchain division, emphasizes that JPMD can be treated by institutional clients as bank deposits on the balance sheet. This provides the tokens with familiar security and clarity in financial and accounting practices. While stablecoins have a 1:1 backing with the US dollar, the value of JPMD is based on the reliable liquidity frameworks of traditional bank deposits.