JPMorgan Set to Launch JPMD Deposit Token on Coinbase’s Base Blockchain
JPMorgan is gearing up to pilot a new dollar-denominated deposit token named JPMD on Coinbase’s Base blockchain in the coming days, as revealed by Naveen Mallela, co-head of the global blockchain division, in an interview with Bloomberg News on June 17.
During the trial period, a fixed amount of JPMD will be transferred from JPMorgan’s digital wallet to Coinbase, where selected institutional users will have access to the token for payments and settlements. Coinbase’s institutional clients will utilize JPMD for on-chain transactions, with plans to expand the trial to other client segments and additional currency denominations pending regulatory approval.
JPMD is unique in that it represents a claim on deposits held at the bank, distinguishing it from stablecoins that rely on segregated securities reserves. Mallela emphasized that deposit tokens offer a more attractive option for institutions as they operate within the fractional-reserve banking system, can accrue interest, and may be eligible for deposit insurance.
JPMorgan, which already processes over $2 billion daily through its private Kinexys Digital Payments network (formerly JPM Coin), aims to revolutionize commercial banking by introducing on-chain transactions with the launch of JPMD.
The bank’s recent trademark filing for “JPMD” on June 16 covers a wide range of services related to digital tokens, including trading, transfer, and payment services. Base, confirming the collaboration on June 17, described JPMD as the first token of its kind on a public blockchain, enabling fast and secure money movement between trusted parties on a 24/7 basis. The platform envisions a future where commercial banking seamlessly integrates with blockchain technology.
Mallela outlined in JPMorgan’s whitepaper that commercial bank money constitutes a significant portion of circulating funds and is poised to play a similar role in digital form. The bank anticipates strong institutional demand for a bank-issued alternative to stablecoins, driving early adoption of JPMD.
Pending a successful pilot and regulatory approvals, JPMorgan plans to ramp up issuance volumes and introduce additional currency options for deposit tokens, positioning them as a fundamental tool for cross-border settlement and on-chain liquidity management.
As major financial institutions like Bank of America and the Depository Trust & Clearing Corporation (DTCC) ramp up blockchain initiatives, the industry is closely monitoring stablecoin legislation advancements in Congress, which could establish formal rules for reserves and audits.
In conclusion, JPMorgan’s upcoming launch of JPMD on Coinbase’s Base blockchain marks a significant step towards transforming traditional banking operations through blockchain technology. Stay tuned for more updates on this groundbreaking development.