JPMorgan Leads Big Banks Into Deposit Tokens After Senate Vote

When JPMorgan Chase, the world’s largest U.S. bank, announces something new, the financial world frequently tunes in.

And on Tuesday (June 17), the bank announced plans to launch a product called a “deposit token” that will serve as a digital representation of commercial bank money and will be available only to the bank’s institutional clients.

The tokens, known as JPMD, are minted by JPMorgan and transmitted to participating institutional clients, including Coinbase, via smart contract transactions on the Base network. At all times, each unit of JPMD is fully backed by a corresponding fiat deposit, ensuring parity between on-chain representation and off-chain liability. Unlike today’s major stablecoins, deposit tokens could be covered by deposit insurance in the future as well as interest-bearing.

The JPMD launch marks the first time a major commercial bank has deployed deposit-based products on a public blockchain, but the timing isn’t coincidental. Also on Tuesday, the U.S. Senate passed the GENIUS Act, an acronym for Guiding and Establishing National Innovation for U.S. Stablecoins of 2025 Act, in a 68-30 vote, sending the bill up to the House.

The GENIUS Act establishes regulatory clarity that in essence can provide a green light for banks to explore tokenized deposits without the legal murk surrounding stablecoins.

Though modest in immediate scale, being entirely in-house, J.P. Morgan’s deposit token pilot provides insight into how large financial institutions may navigate the evolving demands of settlement efficiency, regulatory compliance, and market participation in a tokenized environment.

Read more: Are Closed-Loop Financial Instruments the Future of Institutional Stablecoins?

Technical Foundations and Operational Mechanics

Against the backdrop of regulatory and marketplace momentum in the U.S., it is increasingly evident that the architecture of digital finance may not be defined solely by startups and technologists. Large, regulated institutions are increasingly not merely adapting to this evolution; but they are beginning to shape it in their own image.

Other major banks such as Bank of America, Citigroup, Wells Fargo and others, have reportedly been in talks to launch joint stablecoins or tokens. JPMorgan’s early move positions it as the first among equals. Although, as the bank stresses, JPMD is a deposit token and not a stablecoin.

“Everybody’s jumping into stablecoins right now,” Brett McLain, head of payments and blockchain at Kraken, told PYMNTS. “All the big banks, they’re talking about creating their own; others want to leverage existing ones.”

At a technical level, the JPMD token is conceived as a digital representation of U.S. dollar deposits held at JPMorgan. These tokens are issued in direct correspondence with balances in client accounts and are not free-floating or algorithmically stabilized.

This one-to-one collateralization framework distinguishes deposit tokens from many of the stablecoin instruments currently circulating within crypto-capital markets. Whereas stablecoins are typically issued by nonbank entities and backed by reserves held in trust or custodial arrangements, deposit tokens originate within the commercial banking system itself. They are, therefore, subject to standard supervisory regimes, including liquidity coverage requirements, counterparty risk assessments and reporting obligations.

JPMorgan’s strategic intent appears twofold. First, by utilizing a regulated deposit token rather than a conventional stablecoin, JPMorgan is aiming to preserve the structural rigor of traditional commercial banking within a digital framework. Second, the decision to conduct the pilot on Base, a Layer 2 Ethereum-compatible network operated with institutional oversight mechanisms, may suggest a cautious but deliberate attempt to balance interoperability with control.

Read more: Why America’s Biggest Banks Want to Reinvent the Stablecoin

The Institutional Incentives Around Blockchain

Unlike stablecoins, which are often tailored for retail or crypto-native users, deposit tokens such as JPMD are expressly designed to accommodate the requirements of institutional counterparties. This includes integration with treasury management systems, eligibility for interest accrual and potential utility in tokenized securities settlement.

Rohit Chopra, who was the third director of the Consumer Financial Protection Bureau and previous member of the Federal Trade Commission, advocated for tokenized bank deposits of U.S. fiat to form the backing of a U.S. stablecoin at a May stablecoin conference.

It comes against a backdrop where the backing and reserves of stablecoins have also come into question, although the proposed U.S. regulations seek to mollify this by requiring stablecoins to be backed 1:1 by U.S. Treasuries, issued by regulated entities and subject to audits/AML.