JPMorgan Launches Deposit Token JPM Coin On Coinbase’s Base

JPMorgan Chase & Co. has launched its digital deposit token, JPM Coin (JPMD), on Coinbase’s Base blockchain, deepening Wall Street’s push into Web3 payments.

According to a Bloomberg report that quoted Naveen Mallela, the co-head of JPMorgan’s blockchain group Kinexys, the token represents dollar deposits in clients’ accounts and will enable near-instantaneous transfers. 

Mallela said that while there is “a lot of buzz” around stablecoins at the moment, “deposit-based products offer a compelling alternative” for institutional clients.

Other firms seem to agree with the Bank of New York Mellon and HSBC saying they are also working on their own deposit token solutions. 

JPM Coin Launch Comes After A Months-Long Trial

With JPM Coin, payment processing can happen in seconds rather than days and payments can take place 24/7 instead of only during banking hours, given blockchain technology’s continuous operation.

The launch of JPM Coin comes after plans for the token’s pilot period were first announced in June. 

In the months after those plans were announced, the firm carried out the pilot with major companies that included Mastercard, Coinbase, and B2C2, according to a statement by the companies. 

For now, JPMD is only available on Base. However, Mallela said the bank plans to expand the token to other blockchain networks. What’s more, there are also plans to expand the token to multiple other currencies, pending regulatory approval. 

In preparation for the multi-currency plans, Mallela said the bank has already trademarked the ticker symbol “JPME” for the potential future launch of a euro-denominated deposit token.

Deposit-Based Products Can Offer Direct Yield

Unlike stablecoins that are backed by liquid reserves at a ratio of 1:1, deposit-based tokens represent a claim on existing customer deposits. In essence, they’re tokenized versions of money that is already sitting in bank accounts.

According to Mallela, deposit-based products have a major advantage over stablecoins in the fact that they can be yield-bearing.

Currently, the GENIUS Act prohibits stablecoin issuers from offering yields to their clients directly. But this ban is not extended to third parties or affiliates. Stablecoin firms have seen this as a way to work around the ban and Coinbase already offers USDC yields to holders.

That has been a point of contention between banks and crypto-native firms that have their own stablecoins. Banking groups have urged Congress to address the “loophole,” while crypto firms argue these calls are part of an effort to limit competition in the market. 

After the US Treasury Department asked for public comment on how to implement the GENIUS Act, Coinbase said it is necessary to implement regulations that follow the clear intent of the GENIUS Act, including the current wording around direct stablecoin yields.