Positive news for traditional finance as JPMorgan Chase is bullish on banks issuing "deposit tokens"

While the cryptocurrency world is buzzing about the ban on the issuance of Paxos stablecoin BUSD by regulators and the debate on whether stablecoins are securities, JPMorgan, a traditional financial institution with years of experience in blockchain technology, has finally taken the opportunity to boldly declare their optimism for bank-issued "deposit tokens"!

JPM Coin Issued by JPMorgan Chase

JPMorgan Chase launched its own Onyx blockchain network in 2020, making it one of the early traditional financial institutions to embrace blockchain technology. They have issued their own deposit token, JPM Coin, pegged 1:1 to the U.S. dollar. Customers can convert their U.S. dollars deposited with JPMorgan Chase into JPM Coin, enabling the funds to move through the Onyx system for instant payment and accounting records, resolving the lengthy traditional financial processes with multiple layers of clearance.

According to a report from Bloomberg, a study jointly released by JPMorgan Chase and consulting firm Oliver Wyman suggests that commercial banks can play a key role in the digital currency space by issuing tokens. These tokens represent the same deposit requirements as balances held by banks but are recorded on the blockchain and can be used for cross-border payments or decentralized financial platforms.

Naveen Mallela, Head of JPMorgan Chase's Onyx blockchain token system, stated in an interview:

We see this as a potential evolution of the product line, where deposit tokens are a way for well-regulated banks to offer secure forms of money for innovation in the DeFi world, such as decentralized exchanges and lending protocols.

Active Participation in Various Initiatives

In November last year, Singapore's largest bank, DBS Bank, completed a repurchase agreement transaction using JPMorgan Chase's Onyx. Traditional repurchase agreements are based on business days, but by tokenizing them through the Onyx digital asset network, transactions can be completed in a matter of hours, with interest calculations down to the minute.

In addition, JPMorgan Chase is actively collaborating with the Monetary Authority of Singapore (MAS) on the Guardian project, which utilizes decentralized finance (DeFi) and asset tokenization applications for forex and government bond trading, saving costs and time required for settlement in the traditional financial markets.