Banks to Issue Stablecoins! JPMorgan Plans to Issue Digital Deposit Tokens, but Not for Trading Cryptocurrencies

According to Bloomberg, internal sources at the U.S. financial giant JPMorgan Chase revealed that it is planning to issue a digital deposit token similar to a stablecoin.

JPMorgan Plans to Issue Digital Deposit Tokens

The U.S. financial giant JPMorgan Chase is actively exploring digital deposit tokens based on blockchain technology in an effort to enhance the efficiency of cross-border payments and settlements.

Internal sources indicate that with regulatory approval, this token could significantly improve transaction speeds. JPMorgan's expansion into blockchain demonstrates Wall Street's trend of seeking to simplify financial processes through cryptographic technology.

Deposit Tokens Reduce Transaction Costs, Provided They Are Compliant

A deposit token is a transferable digital currency that represents a customer's claim on commercial bank deposits and achieves instant settlement on the blockchain, viewed as a key advantage in reducing transaction costs by supporters.

However, JPMorgan has explicitly stated that they respect the regulatory approval process and will wait for approval to launch this product for corporate clients in less than a year.

Differences Between JPM Coin and Deposit Tokens

JPMorgan has previously successfully developed the JPM Coin system, allowing corporate clients to transfer U.S. dollars and euros between internal accounts at the bank, handling approximately $300 billion in transactions since its launch.

Unlike JPM Coin, the new deposit token will have broader applications, including facilitating transfers to customers of other banks and settling transactions of tokenized securities or financial instruments issued on the blockchain.

The deposit token will be integrated into the bank's existing compliance system to ensure the legality and security of transactions. Initially, the deposit token may be denominated in U.S. dollars, but could also be denominated in other fiat currencies in the future, depending on regulatory approval.

JPMorgan's Deposit Token is the Future! Not for Use in Cryptocurrency Trading

"It will not be used to purchase cryptocurrencies or replace stablecoins like USDT, but is intended for use in payments, settlements, and related functions within the traditional financial system," stated JPMorgan.

JPMorgan emphasizes that they believe the deposit token will become a widely used form of currency in the digital asset ecosystem, similar to how commercial bank deposits account for over 90% of circulating currency.

JPMorgan continues to drive the application of blockchain technology and strives to simplify some of the complex processes in the financial industry. Despite nearly a decade of experimentation with blockchain technology, its actual utility in the financial sector remains questioned, leading some to doubt its real impact on financial operations.