JPMorgan Launches Deposit Token JPMD on Coinbase Blockchain
JPMorgan Chase has launched a deposit token called JPMD on Coinbase's Base blockchain, marking the first time a commercial bank has placed deposit-based products on a public blockchain network.
The US bank will transfer a fixed amount of JPMD from its digital wallet to Coinbase Global within days, according to Naveen Mallela, Global Co-head of JPMorgan's blockchain division, Kinexys.
The token represents dollar deposits at JPMorgan and will be available exclusively to the bank's institutional clients through a permissioned system.
The pilot programme will run for several months before potentially expanding to other users and currency denominations, subject to regulatory approval.
Coinbase's institutional clients will be able to use the deposit tokens for transactions on the Base network, which operates as a layer-2 solution built on Ethereum.
JPMorgan told CNBC that the deposit token offers clients round-the-clock settlement capabilities and the ability to pay interest to holders. The bank selected Coinbase as its blockchain partner due to the crypto exchange's existing client relationship and market position.
Deposit tokens versus stablecoins
Deposit tokens differ from stablecoins in their underlying structure and regulatory framework. While stablecoins are typically backed by baskets of securities such as government bonds or liquid assets, deposit tokens represent direct claims against commercial bank deposits.
“From an institutional standpoint, deposit tokens are a superior alternative to stablecoins,” Naveen tells Bloomberg. “Because they are based on fractional banking, we think it is more scalable.”
The deposit token structure allows for interest payments and deposit insurance coverage, features that major stablecoins currently lack.
The global stablecoin market is valued at approximately US$262bn, according to CoinGecko data, with Tether's USDT and Circle's USDC commanding the largest market shares.
US stablecoin regulation remains incomplete, though the Senate is scheduled to vote on the GENIUS Act, which would introduce formal oversight for such tokens.
The European Union already regulates stablecoins under its Markets in Crypto-Assets Regulation framework.
“We see institutions using JPMD for onchain digital asset settlement solutions as well as for making cross-border business-to-business transactions”
Expanding blockchain operations
The JPMD launch extends JPMorgan's blockchain activities beyond its internal systems. The bank operates Kinexys Digital Payments, formerly JPM Coin, which processes over US$2bn in daily transactions for corporate clients moving dollars, euros and pounds between accounts.
Transaction volumes on the Kinexys network increased tenfold last year, though this represents a fraction of the roughly US$10tn in daily transactions handled by JPMorgan's payments division.
“We see institutions using JPMD for onchain digital asset settlement solutions as well as for making cross-border business-to-business transactions,” Naveen tells CNBC.
“Given the fact that deposit tokens would eventually be interest bearing as well, this would provide better fungibility with existing deposit products that institutions currently use.”
The bank expects JPMD to attract different users from its existing Kinexys Digital Payments network, particularly clients seeking commercial bank-backed alternatives to stablecoins.
Base blockchain adoption
The pilot programme strengthens Base's position in the layer-2 blockchain ecosystem. Launched by Coinbase in 2023, Base has become the most popular Ethereum layer-2 network by total value locked, with nearly US$4bn secured across applications ranging from decentralised finance to gaming.
Base's appeal stems from lower transaction fees compared to the Ethereum mainnet and faster processing speeds. The network initially gained traction through memecoin launches before expanding into institutional applications.
“It's the first time that a commercial bank is putting commercial money, a deposit-based product, on a public chain and we are starting with Base,” Naveen says.
Banking institutions have historically avoided public blockchain deployments due to regulatory concerns about security and usage. The regulatory environment has shifted during President Trump's second administration, with increased openness towards crypto integration.
JPMorgan has explored deposit tokens for cross-border payments and settlements over several years.
In a previous white paper, the bank stated that “deposit tokens will become a widely used form of money within the digital asset ecosystem, just as commercial bank money in the form of bank deposits makes up over 90% of circulating money today”.
“JPMD has had preliminary interest from large institutional players who want more native onchain cash solutions from pre-eminent and reputed financial institutions,” Naveen adds.
Explore the latest edition of FinTech Magazine and be part of the conversation at our global conference series, FinTech LIVE.
Discover all our upcoming events and secure your tickets today.
FinTech Magazine is a BizClik brand
