JPMorgan is preparing to make yet another significant stride into the blockchain sphere.
JPMorgan, one of the oldest financial institutions in the United States, is reportedly in the final stages of developing a deposit token to facilitate faster cross-border transactions.
The initiative, pending US regulatory approval, aims to serve corporate clients for various payment and settlement applications.
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Unlike stablecoins, typically issued by non-bank entities, deposit tokens are blockchain-issued instruments by a depository institution to represent a deposit position.
It is worth noting that the new technology is different from the bank's existing JPM Coin, which is limited to transactions within JPMorgan.
JPMorgan spokesperson elaborated on the bank's caution towards regulatory compliance, stating:
Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used.
The spokesperson further indicated that if regulators show interest, the existing blockchain infrastructure can allow a relatively quick launch of deposit tokens.
Notably, in February, JPMorgan publicly supported the idea of deposit tokens, mentioning their advantage in terms of stability and reliability over other digital assets like stablecoins and central bank digital currencies.
Last year, JPMorgan took the new deposit token for a test drive in a single transaction as part of Project Guardian. This initiative, led by the Monetary Authority of Singapore, was a cross-industry collaborative effort.
This new development positions JPMorgan as a direct competitor to existing stablecoin issuers and even firms like PayPal, which recently entered the field with its own stablecoin, PayPal USD (PYUSD).
JPMorgan's introduction of a deposit token reflects its continuous push into blockchain-based solutions. While the bank awaits regulatory approval, it stands ready to leverage its new token for swifter, more efficient transactions. This move enhances JPMorgan’s suite of blockchain-based services and amplifies competition in a market already shaken by the entry of fintech firms and evolving stablecoin providers.
