JPMorgan Is Exploring Blockchain-Based Deposit Token for Payments, Settlements

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JPMorgan Chase & Co. is in the early stages of exploring a blockchain-based digital deposit token for speeding up cross-border payments and settlement, according to a person familiar with the work.

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The US’s biggest bank by assets has developed most of the underlying infrastructure needed to run the new form of payment, but wouldn’t create the token unless the project is approved by US regulators, according to the person, who asked not to be named because the matter is private. The bank may launch the product for use by corporate clients less than a year after it receives a go-ahead, the person said.

Deposit tokens are transferable digital coins that represent a deposit claim against a commercial bank. Essentially, they are a digital version of the deposits that customers hold in their accounts. Because transactions using these coins are processed on blockchain rails, settlement is instantaneous, and proponents of the novel form of money suggest they may make transactions cheaper as well.

“Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used,” a JPMorgan spokesperson said in a statement. “Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly.

The deposit token would likely first be denominated in US dollars, but could later become available in other fiat currencies, if greenlighted by relevant regulators, a person familiar with the potential process said. It would not be intended to be used for purchases of cryptocurrencies, or as a replacement for so-called stablecoins like Tether’s USDT.

“We believe deposit tokens will become a widely used form of money within the digital asset ecosystem, just as commercial bank money in the form of bank deposits makes up over 90% of circulating money today,” JPMorgan said in the recent study.

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