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JPMorgan Explores Blockchain-Powered Deposit Token

JPMorgan’s Blockchain Vision

JPMorgan Chase & Co is in the early stages of exploring a blockchain-based digital deposit token to facilitate cross-border payments and settlements, according to an anonymous source familiar with the matter.

The largest bank in the United States has laid the foundational infrastructure for this innovative payment method. However, the creation of the token is contingent on obtaining approval from US regulatory authorities, as noted by the anonymous source. If regulatory approval is granted, the bank could potentially introduce the product for use by corporate clients in less than a year.

Deposit tokens are digital coins representing a claim to deposits held by a commercial bank, serving as a digital counterpart to customer deposits. Transactions with these tokens are processed on blockchain networks, allowing for instantaneous settlements and potential reduction in transaction costs.

This new product differs from the existing JPM Coin, which facilitates the transfer of dollars and euros exclusively within the financial institution. The upcoming deposit token will extend its usability to transactions involving other banks and various forms of settlements on blockchain networks, including the trading of tokenized securities.

Similar to the JPM Coin, transactions involving the deposit token will adhere to strict know-your-customer and anti-fraud procedures. The token underwent a pilot test during a single transaction as part of Project Guardian, spearheaded by the Monetary Authority of Singapore.

A JPMorgan spokesperson acknowledged the potential benefits of deposit tokens but emphasized the need for regulatory caution and thoroughness in developing and adopting any new product. The bank’s blockchain infrastructure would support the launch of deposit tokens relatively quickly if regulatory approval is granted.

JPMorgan has conducted a pilot test involving the issuance of deposit tokens as part of the Monetary Authority of Singapore’s Project Guardian and has highlighted the potential of this digital currency format in a recent study.

This move expands JPMorgan’s blockchain initiatives, intensifying competition among stablecoin providers. PayPal, another major player, recently entered the race by launching its stablecoin in August, prompting traditional rivals like Circle to expand the availability of its stablecoin, USD Coin, to enhance adoption.

Read our article on PayPal here.

It’s encouraging to see further institutional adoption in the United States despite the ongoing regulatory challenges!

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