JP Morgan Launches "JPMD": a Deposit-Token Alternative to Stablecoins

The move signals a deeper step into the blockchain and crypto space from the world’s biggest bank by market value.

The test will take place on Coinbase’s blockchain Base, which is built on the Ethereum network, JPMorgan executives said, in interviews with CNBC and others on 17 June. JPMorgan said it chose Coinbase as a partner for the pilot as the two firms have already done business together.

Institutional clients

The bank is expected to transfer a fixed number of tokens to the crypto exchange in the coming days with the value of the token representing the dollar deposits JPMorgan holds. As it is a permissioned-token, on a blockchain that's not open to the public, access will be restricted to institutional clients. 

For those customers, a deposit-token provides a better solution than a stablecoin as it gives them a smoother way to make financial transactions while maintaining a link to traditional banking, according to JPMorgan.

Ending speculation

"We see institutions using JPMD for on-chain digital asset settlement solutions as well as for making cross-border business-to-business transactions," Naveen Mallela, global co-head of Kinexys, JP Morgan's blockchain unit, told CNBC.

The announcement concludes a few days of speculation about whether JPMorgan was developing its own stablecoin after a JPMD trademark was filed on Monday 16 June.