JPMorgan Chase Says Deposit Token Offers ‘Superior Alternative’ to Stablecoins

JPMorgan Chase 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 deposit token, dubbed “JPMD,” will provide an alternative to stablecoins and will be closely connected to traditional banking systems, CNBC reported Tuesday (June 17), citing its interview with Naveen Mallela, global co-head of Kinexys, which is JPMorgan Chase’s blockchain unit.

“We see institutions using JPMD for on-chain digital asset settlement solutions as well as for making cross-border business-to-business transactions,” Mallela told CNBC. “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.”

JPMorgan Chase will launch JPMD on Coinbase’s public blockchain, Base, according to the report.

In a post on LinkedIn that links to the CNBC article, Mallela said the launch of JPMD on Base by Coinbase will be JPMorgan Chase’s first foray into public blockchains and signals the bank’s belief that “deposit-based products will remain the cornerstone of money.”

“A first of its kind deposit token, JPMD will combine many of the advantages of stablecoins with the added benefits of interest payouts, deposit insurance, fungibility with existing account-based forms of money,” Mallela said in the post. “For institutional users in particular, deposit tokens will be a superior alternative to existing options for on-chain cash on public blockchains.”

Mallela added that capabilities built by Kinexys over the years will enable interoperability between on-chain and off-chain infrastructure.

Base commented on the launch of JPMD on the social media platform X, saying in one post that JPMorgan Chase is “bringing banking onchain” and that the deposit token will enable “fast, secure, 24/7 money movement between trusted parties.”

In a second post on X, Base said JPMorgan Chase chose the company’s blockchain because it enables near-instant settlement and real-time liquidity.

“Moving money should take seconds, not days,” Base said in the post. “Commercial banking is coming onchain.”

PYMNTS reported in June 2024 that deposit tokens, or tokenized commercial bank assets, were being embraced as a liquid means of payment and stores of value in blockchain-native environments. Proponents of deposit token use include some of the world’s largest banks.

It was reported in September 2023 that JPMorgan Chase was considering creating a digital deposit token for faster cross-border payments and settlements, had already developed the necessary infrastructure for the innovative payment system, and was awaiting approval from U.S. regulators to proceed.