Wall Street giants enter the game: JPMorgan Chase launches dollar deposit token JPM Coin for 24/7 trading and second-level payments

As financial institutions continue to expand their presence in the digital asset space, Wall Street investment banking giant JPMorgan Chase has officially launched its dollar deposit token, JPM Coin, to institutional clients. This move aims to leverage blockchain technology for 24/7, near-instant payment settlements, marking a significant step for traditional finance in the realm of tokenization.

Naveen Mallela, Global Co-Head of Kinexys at JPMorgan's blockchain division, stated in an interview that the deposit token, named JPM Coin, represents clients' dollar deposits at the bank and has now begun to be offered to institutional clients. Users can send and receive funds via the Base public chain associated with Coinbase Global Inc., enabling payments to be completed in seconds and operate continuously around the clock, fundamentally transforming the traditional payment model that relies on business days and bank operating hours.

According to reports, the official launch of JPM Coin followed several months of trial runs, with participating companies including Mastercard, Coinbase, and B2C2. This move represents a significant expansion for JPMorgan in the blockchain space and reflects a growing trend among large global financial institutions to explore the use of digital assets to enhance payment efficiency and reduce costs.

The release comes after the U.S. passed the Genius Act, which regulates stablecoins, and many large enterprises, including Citigroup, Santander Bank, Deutsche Bank, and PayPal Holdings Inc., are actively experimenting with digital asset payment solutions, indicating an increasing market acceptance of compliant digital currencies.

What is a Deposit Token?

A deposit token is a digital currency issued by commercial banks that represents a claim on existing customer deposits. Essentially, they are a tokenized version of funds already in a bank account, designed to facilitate easier transfers using blockchain networks.

This differs from stablecoins, which are typically pegged to fiat currencies and backed one-to-one by government bonds or other highly liquid assets. Naveen Mallela pointed out:

“We believe that while stablecoins have received a lot of attention, deposit-based products offer an extremely attractive alternative for institutional clients.”

A key advantage of deposit tokens over stablecoins is that they can generate interest. Stablecoin issuers typically earn returns from their reserve assets, but this income is generally not passed on to token holders. In contrast, deposit tokens can pay interest to holders based on their bank deposits, which is particularly appealing to institutions with large balances, such as cryptocurrency trading firms that use stablecoins for fund transfers and as collateral. Naveen Mallela added that JPM Coin will be accepted by Coinbase as collateral, further expanding its use cases within the crypto ecosystem.

JPMorgan's Expansion Blueprint

JPMorgan has a clear future plan for JPM Coin. Naveen Mallela revealed that the bank plans to extend access to the token to its clients' clients at a later stage and, upon obtaining regulatory approval, expand it to other currency denominations. ** The bank has registered the code JPME for a potential future euro deposit token.

In addition, JPMorgan Chase intends to expand JPM Coin to other blockchain networks. Its token code JPMD's pilot program was announced as early as June this year.

Although financial companies have been exploring blockchain technology for more than a decade, few applications have achieved commercialization, and its scale of use remains small compared to traditional markets. JPMorgan Chase is one of the most active participants in the financial sector, operating a network called Kinexys Digital Payments (formerly JPMCoin), which allows corporate clients to transfer US dollars, euros, and British pounds within the bank.

Data shows that the network currently processes over $3 billion in transactions daily, but this still represents only a small portion compared to the approximately $10 trillion processed daily by its payment department. However, as other banks like Bank of New York Mellon and HSBC are also exploring or have launched deposit token services, competition among traditional financial giants in the digital asset space is intensifying