JPMorgan Chase is about to test a new digital token called JPMD, which stands for JPMorgan Deposit Token. This token will represent U.S. dollar deposits held at the bank and will be used for making transactions on blockchain technology.
In the coming days, JPMorgan will send a fixed amount of JPMD tokens from its digital wallet to Coinbase, the biggest crypto exchange in the U.S. This transfer will happen on Base, a public blockchain linked to Coinbase.
The goal is to let Coinbase’s institutional clients use JPMD for faster and safer transactions. If the pilot goes well and gets regulatory approval, JPMorgan may expand this service to more users and support other currencies too.
According to Naveen Mallela, who leads JPMorgan’s blockchain unit (Kinexys), the goal is to let Coinbase’s institutional clients use JPMD tokens to make faster and more secure payments. The bank will run this test for a few months. If all goes well and if regulators approve, then it could later allow more users and even add support for other currencies.
Just a day earlier, JPMorgan also filed a new trademark for “JPMD,” suggesting broader plans. According to the filing, the bank intends to offer a wide range of digital asset services, like trading, transferring, and making payments using digital currencies.
Mallela said, “From an institutional standpoint, deposit tokens are a superior alternative to stablecoins. Because they are based on fractional banking, we think it is more scalable.” He added that deposit tokens like JPMD might earn interest in the future and could be protected by deposit insurance. This is not offered by Stablecoin right now.
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