Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., speaks to the Economic Club of New York in Manhattan, New York City, on April 23, 2024.
Mike Segar | Reuters
JPMorgan Chase is taking a step further into the cryptocurrency space with its own stablecoin-like token, called JPMD.
The U.S. banking giant told CNBC on Tuesday that it’s planning to launch a so-called deposit token on Coinbase’s public blockchain Base, which is built on top of the Ethereum network. Each deposit token is meant to serve as a digital representation of a commercial bank deposit.
JPMD will offer clients round-the-clock settlement as well as the ability to pay interest to holders. It is a so-called “permissioned token,” meaning it is only available to JPMorgan’s institutional clients — unlike many stablecoins, which are publicly available.
“We see institutions using JPMD for onchain digital asset settlement solutions as well as for making cross-border business-to-business transactions,” Naveen Mallela, global co-head of Kinexys, J.P. Morgan’s blockchain unit, told CNBC Tuesday.
“Given the fact that deposit tokens would eventually be interest bearing as well, this would provide better fungibility with existing deposit products that institutions currently use,” he added.
Deposit token vs. stablecoin
JPMorgan said the benefit of launching a deposit token over a stablecoin is that it gives institutional clients a way to move money around faster and easier while still having a close connection with traditional banking systems.
A stablecoin is a type of digital token that’s designed to be pegged 1:1 to the value of a fiat currency at all times. The most popular stablecoins are Tether’s USDT and Circle’s USDC. The entire stablecoin market is worth approximately $262 billion, according to data from CoinGecko.
In the U.S., stablecoins remain broadly unregulated — although this is likely to change soon. The Senate is set to vote Tuesday on the GENIUS Act, legislation that would introduce formal regulation for such tokens.
Elsewhere, the European Union regulates stablecoins under its Markets in Crypto-Assets Regulation, or MiCA, while the U.K. has also laid out plans to regulate the crypto industry. Britain’s Financial Conduct Authority is currently consulting on proposals to require stablecoin issuers to ensure their tokens maintain their value against a given asset.
JPMorgan’s digital asset chief told CNBC that the bank chose Coinbase as its blockchain partner since the crypto exchange is already a long-standing client and a leader in the crypto space.
JPMD has had “preliminary interest from large institutional players who want more native onchain cash solutions from pre-eminent and reputed financial institutions,” Mallela added.
Speculation had been building around JPMorgan’s new crypto offering after a trademark application filed by the bank for “JPMD” was made public Monday.
The trademark outlined a broad range of crypto services under the JPMD name, including trading, exchange, transfer and payment services for digital assets.
Various crypto media outlets had speculated whether the bank was about to launch its own stablecoin. However, JPMorgan says that, while its token may share some similarities with a stablecoin, it’s ultimately a different kind of product.
