Author: Weilin, PANews

On June 18, JPMorgan Chase announced that it would pilot a deposit token called JPMD, which would be deployed on the Base blockchain supported by Coinbase. It is expected that in the next few days, JPMorgan Chase will transfer a certain amount of JPMD from its digital wallet to Coinbase, the largest crypto exchange in the United States.

Initially, the token will only be available to JPMorgan's institutional clients, and will gradually expand to a wider user group and more currencies after US regulatory approval.

JPMD will be piloted for several months and may have interest-bearing function in the future

The launch of JPMD was not a hasty move. As early as 2023, JPMorgan Chase had begun studying the feasibility of deposit tokens in its blockchain division Kinexys. Just one day before the announcement of the JPMD pilot, the outside world discovered that the bank had applied for the "JPMD" trademark, which covers functions such as crypto asset trading, payment, and custody. At that time, the outside world speculated that this would be a signal for JPMorgan Chase to enter the stablecoin market.

However, JPMorgan did not choose to issue a stablecoin, but instead emphasized "deposit tokens" as a more robust and regulated alternative.

Naveen Mallela, global co-head of Kinexys, JPMorgan's blockchain division, said in an interview with Bloomberg that the issuance and transfer of the token will occur on Coinbase's associated public blockchain Base and will be denominated in US dollars. In the future, Coinbase's institutional customers will be able to use this deposit token for transactions. He added that JPMorgan plans to run the pilot for several months and gradually expand it to other users and currencies after obtaining regulatory approval.

Mallela said: "From an institutional perspective, deposit tokens are a superior alternative to stablecoins. Because they are based on a fractional reserve banking system, we think they are more scalable." He pointed out that deposit tokens like JPMD may have interest-bearing functions in the future and may include deposit insurance, which are not usually available in mainstream stablecoins.

The JPMD pilot means the bank is expanding the use of digital asset products beyond its internal systems. JPMorgan has been at the forefront of Wall Street’s push for blockchain technology and currently operates a network called Kinexys Digital Payments (formerly JPM Coin) that allows corporate clients to transfer dollars, euros and pounds from their bank accounts.

JPMorgan Chase said it now processes more than $2 billion in transactions per day on average after the network grew tenfold last year, according to Bloomberg. But that's still just a fraction of the roughly $10 trillion in total transactions processed daily by the bank's payments division.

Mallela said JPMorgan will continue to operate and expand the Kinexys Digital Payments network, but initially expects JPMD's user base to be different, with JPMD expected to be more popular among clients seeking an alternative to stablecoins backed by commercial banks.

The JPMD pilot also further supports the development of Base. "Fund transfers should be measured in seconds, not days," Base said in an announcement on the social media platform X on June 18. "Commercial banks are going on the blockchain."

Although JPMD is designed to run on a public blockchain, Mallela said it will remain a permissioned token, available only to JPMorgan’s institutional clients.

Is the Stablecoin Market “Overcrowded”? How is the JPMD Deposit Token Different from Stablecoins?

Meanwhile, another JPMorgan executive said at the DigiAssets 2025 conference on June 17 that she was wary of the “overcrowded” stablecoin market.

“I just think we all need to step back a little bit as an industry and think about whether we end up with an overcrowded market or more fragmentation as companies choose to use their own (stablecoins),” Emma Lovett, an executive director at JPMorgan Chase & Co. who leads the firm’s work on distributed ledger technology and credit in the market, said at the London conference.

She said that the market is currently "at the height of the stablecoin hype." But she believes that "in two or three years, it will be very interesting to see how the market evolves, such as who issues their own stablecoins and who uses which one."

In fact, in a white paper published a few years ago, JPMorgan Chase introduced the meaning of deposit tokens and the difference between them and stablecoins. The institution said that the continued development of blockchain technology in commercial applications is creating a demand for blockchain-native "cash equivalents" that can be used as liquid means of payment and value storage tools in a blockchain-native environment. So far, stablecoins have mainly met this demand.

But at the same time, deposit tokens and central bank digital currencies (CBDCs) have become the focus of discussions on the optimal form of digital currencies in the future. Among them, deposit tokens refer to transferable tokens issued by licensed deposit institutions on the blockchain, representing the holder's deposit claim rights against the issuing institution. Given that deposit tokens are commercial bank currencies presented in the form of new technologies, they are naturally part of the banking system and are subject to the current regulation and supervision applicable to commercial banks.

Deposit tokens can support a variety of application scenarios, which are equivalent to the current functions of commercial bank currencies, including domestic and foreign payments, transactions and settlements, and the provision of cash collateral. Its token form can also realize new functions, such as programmability, instant and atomic settlement, thereby speeding up transactions and automating complex payment operations.

The white paper states that stablecoins are an important financial innovation in the past few years, and their development has promoted the growth of the digital asset ecosystem. However, as on-chain transaction activities continue to increase in scale and complexity, stablecoins may pose challenges to financial stability, monetary policy, and credit intermediation when used on a large scale.

JPMorgan believes that deposit tokens will become a widely used form of currency in the digital asset ecosystem, just as commercial bank money in the form of bank deposits accounts for more than 90% of the currency in circulation today. Its token form will benefit from the connection with traditional banking infrastructure and existing regulatory guarantees, which already support the sound operation of commercial bank deposits.

In short, a deposit token is a transferable digital currency that represents a claim to a deposit with a commercial bank. Essentially, it is a digital version of a customer's deposit in an account. It is different from a stablecoin, which is a token pegged to a fiat currency and is usually backed 1:1 by a basket of securities (such as government bonds or other highly liquid assets).

Genius Act Passes Senate, Will Boost Stablecoin Adoption

This round of stablecoin craze is largely driven by the advancement of the US GENIUS Act, a bipartisan bill that aims to establish a regulatory framework for stablecoins and digital assets. It is also motivated by the listing of USDC issuer Circle.

On June 18, the U.S. Senate passed the stablecoin regulatory bill GENIUS Act with 68 votes in favor and 30 votes against. The bill will be sent to the House of Representatives for deliberation. The bill establishes a federal regulatory framework for stablecoins, requiring one-to-one reserves, consumer protection, and anti-money laundering mechanisms.

At the DigiAssets 2025 conference in London, an executive at asset manager Franklin Templeton said the European Union was in danger of becoming a “flyover zone” as the United States and Asia accelerate their embrace of digital assets.

In general, the launch of JPMD by JPMorgan Chase is not only an important milestone in the bank’s blockchain strategy, but also reflects that traditional financial institutions are accelerating their exploration of the future form of on-chain payments.

Currently, multinational financial and technology companies including Spain's Santander Bank, Deutsche Bank, and PayPal are also trying to use blockchain technology to achieve more efficient and low-cost payment and settlement services.

As blockchain technology moves toward the mainstream financial system, deposit tokens issued by commercial banks, protected by regulatory frameworks, and connected to the existing account system may become the new stage of "on-chain cash" standards. PANews will continue to pay attention to subsequent developments.