JPMorgan launches a digital deposit token on Coinbase’s blockchain
JPMorgan Chase (JPM) said on Wednesday that it has launched JPM Coin (JPMD), a digital deposit token, on Coinbase’s (COIN) Ethereum Layer 2 public blockchain, Base.
Calling it “a significant, tangible step forward in the evolution of digital money,” JPM Coin will be available to the bank’s institutional clients.
Digital deposit tokens are a digital representation of a bank deposit on a public blockchain and can be interest-bearing, which makes them different from stablecoins. The recently passed GENIUS Act legislation prohibits stablecoin issuers from offering interest.
JPM Coin enables near-instantaneous transfers through Base. It is the first bank-issued USD deposit token.
“Onchain payments are the future,” Coinbase CEO Brian Armstrong said in a post on X after the launch.
Prior to launching the token, the bank conducted successful proof-of-concepts with Coinbase, Mastercard and B2C2. All three companies completed near-instant issuance and redemption of JPMD on Base.
It launched the proof-of-concept in June.
JPMorgan’s institutional clients can use JPM Coin to make near real-time peer-to-peer transfers between Ethereum Virtual Machine (EVM)-compatible wallets. The token is also designed for integration with smart contracts on public blockchain networks
The bank said last week that it had also completed its first transaction on its in-house blockchain — a tokenized private equity fund — that is available to wealthy clients served by its private bank.
The company plans a broad rollout early next year of its tokenization platform, called Kinexys Fund Flow.
“JPM Coin delivers the security of bank-backed deposits and settlement, combined with the speed and innovation of 24/7, near real-time blockchain transactions, increasing efficiency and unlocking liquidity,” Naveen Mallela, global co-head of JPMorgan’s Kinexys, said in a statement.
Mallela told Bloomberg that “deposit tokens are a superior alternative to stablecoins” for institutional clients because they’re based on fractional banking, which he called “more scalable.”
Citigroup CEO Jane Fraser also recently gave her approval of tokenized deposits for Citi’s institutional clients, saying that there has been “an overfocus on stablecoins at the moment.”
“For our client base, the institutional client base, we see tokenized deposits as delivering what the client needs, and this is an area that we've invested in most heavily,” Fraser said.
“And what the clients are after is real-time money movement with minimal to no friction and low cost.”
She noted that tokenized deposits include compliance, reporting, accounting, tax, and AML (anti-money laundering), which are features that institutional investors are seeking.
Lauren Abendschein, VP of institutional sales at Coinbase, said in a statement that the launch of JPMD represents the “next evolution of digital money.”
“We built Base to be a fast, cheap, and secure public blockchain, which can help reduce cost, enhance efficiency, and improve liquidity,” she added. “Coinbase is a longtime JP Morgan institutional client, and the ability to use JPM Coin on Base is helping to bring institutional money into the global onchain economy.”