JPMorgan is venturing further into the cryptocurrency realm with a new blockchain-based solution for international transactions, as reported by Bloomberg. However, the system will only be operational once the bank secures approval from US regulators.
The bank has reportedly nearly completed the infrastructure needed for the new deposit token, initially intended for corporate clients to expedite payments and settlements. Unlike stablecoins, typically issued by non-banking private entities, deposit tokens are blockchain-issued by depository institutions to signify a deposit position.
This new product differs from JPM Coin, which already facilitates corporate clients in transferring dollars and euros across the financial institution. The new deposit token will enable transactions with other banks and is compatible with various forms of blockchain settlements, including tokenized securities trades.
The deposit token shares similarities with JPM Coin in terms of compliance, as its transactions will undergo Know Your Customer and anti-fraud procedures. Last year, as part of Project Guardian, a cross-industry initiative led by the Monetary Authority of Singapore, the new token was trialed in a single transaction. A JPMorgan spokesperson told Bloomberg, “Deposit tokens have a lot of potential advantages, but we also understand that regulators would want to be careful and thorough before any new product is created and utilized.” They added that if there is interest, their blockchain infrastructure could quickly support the launch of deposit tokens. According to the report, JPMorgan processes $10 trillion in daily transactions.
In February, JPMorgan expressed its support for deposit tokens, noting that they might offer greater stability and dependability compared to other solutions like stablecoins and central bank digital currencies.
JPMorgan’s deposit token initiative not only broadens its blockchain-based offerings but also intensifies competition for stablecoin issuers. Recently, PayPal also entered the race for speedier settlements via crypto tokens by launching its stablecoin, PayPal USD (PYUSD), in early August. This move prompted conventional competitors in the US market, such as Circle, to extend its stablecoin USD Coin (USDC) to six additional blockchains to encourage adoption.
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