Will JPMorgan’s Crypto Deposit Token JPM Coin Jolt the Emerging Stablecoin Market?

This article was first published on The Bit Journal: Is it possible for the initiative by JPMorgan to roll out a deposit token called JPM Coin to jolt the digital market and push it beyond the emerging stablecoin market?

The US’s largest bank, JPMorgan, has, in partnership with cryptocurrency exchange Coinbase, taken the digital asset space by surprise after launching a crypto deposit token dubbed JPM Coin. The crypto deposit token could end up blurring that distinction between the traditional banking methods and the cryptocurrency industry.

According to a Bloomberg report, JPM Coin is designed as a token representing dollar deposits that would allow users to send and receive funds via Coinbase Global Inc. This would enable payments to be processed in real-time, 24/7, instead of waiting for days or only during working hours.

Credibility of JPMorgan Chase and Base

JPMorgan announced that it would be piloting its new digital currency, JPM Coin, also known as JPMD, in the next few days. JPM Coin would be a digital representation of bank deposits, managed using blockchain technology. Reports indicate that the firm filed a trademark for “JPMD” over the weekend. A statement from Jesse Pollack, VP of engineering at Coinbase, said:

“This pilot combines the credibility of both JPMorgan Chase and Base to help bring institutional money into a more global economy.”

JPM coin will be used to settle funds transfers and make cross-border business-to-business transfers around the clock on Base, a public Ethereum-based blockchain managed by cryptocurrency exchange Coinbase. The bank further stated that JPM Coin would be exclusively available to its institutional clients, including pension funds and corporations.

Extend the reach of JPM Coin to More Clients

According to Naveen Mallela, global co-head of JPMorgan’s  blockchain division, JPMorgan plans to extend the reach of the JPMD token to more clients in the next few months. Mallela further stated:

“We have always believed in having a token-based solution on public blockchains […] institutional clients can treat JPMD as bank deposits on their balance sheet, providing certainty around financial and accounting treatment.”

The decision by JPMorgan to create a crypto deposit token instead of a stablecoin comes at a time when the digital asset industry is looking to the emerging stablecoin sector, following the passage of the GENIUS Act into law. Different corporations, including Google and Meta, have shown interest in using stablecoins in their payments, as they are considered more stable than traditional forms of crypto, like Bitcoin.

Conclusion

By choosing a crypto deposit token instead of a stablecoin, JPMorgan Chase has taken a totally different direction from other corporations, which could make it stand out in a crowd. If the company extends the token to other blockchains and currencies, the bank could take a leading role in a financial landscape that is increasingly influenced by digital innovation. Whether JPM Coin succeeds or not will depend on the bank’s ability to adapt and the industry’s uptake of the token.

Glossary to Key Terms

JPMorgan Chase: A leading global financial services holding company that resulted from the merger of several historic US banking institutions, most notably J.P. Morgan & Co. and Chase Manhattan Bank.

Stablecoin: A type of cryptocurrency designed to have a stable value by being pegged to a stable asset, most commonly a fiat currency like the US dollar.

Deposit token: A digital asset that represents a claim on a traditional, real-world bank deposit held at a regulated financial institution.

Frequently Asked Questions about Crypto Deposit Tokens

What are crypto deposit tokens?

Crypto deposit tokens are electronic payment instruments issued by regulated banks, representing actual funds held in deposit accounts at that bank.

How do they differ from stablecoins?

Deposit Tokens are issued by regulated, licensed depository institutions and are subject to existing banking regulations, including deposit insurance schemes and liquidity requirements. In contrast, stablecoins are often issued by non-bank entities and may fall under a different, sometimes less comprehensive, regulatory framework.

Who can use them?

Initially, J.P. Morgan is offering deposit tokens to its institutional clients for specific use cases, such as cross-border payments and collateral management.

 

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