JPMorgan Chase (JPM) has begun rolling out a new deposit token, called JPM Coin, to its institutional clients, Bloomberg reported.
A deposit token is a digital payment instrument issued by a bank, representing funds that have been deposited by a customer. It can operate on both public and private blockchain networks, allowing transfers between the bank’s direct clients and, eventually, their own eligible customers.
JPM Coin (ticker: JPMD) represents dollar deposits held at JPMorgan and enables users to send and receive money through Base, a public blockchain affiliated with Coinbase Global (COIN), said Naveen Mallela, global co-head of the bank’s blockchain unit, Kinexys. The system allows for near-instant, 24/7 payments, a major upgrade from traditional transfers that take days and only process during banking hours.
After a trial involving Mastercard, Coinbase, and B2C2, JPMorgan plans to expand JPM Coin’s use to clients of its clients and to other currencies, pending regulatory approval. The bank has also trademarked the ticker JPME for a potential euro-denominated version.
Deposit tokens differ from stablecoins, which are pegged to fiat currencies, and backed one-to-one by assets like government bonds or other liquid assets. While stablecoin issuers earn yields on the reserve assets backing their tokens, those returns are not typically passed on to the holders. In contrast, deposit tokens can pay interest on the underlying bank deposits, making them appealing to large holders—such as crypto trading firms—that use stablecoins to move funds and post collateral.
JPM Coin will be accepted as collateral on Coinbase, Mallela said.
“We think stablecoins get a lot of buzz, but for institutional clients, deposit-based products offer a compelling alternative,” Mallela said. “These can be yield-bearing.”
Other global banks, including BNY Mellon and HSBC, are also developing or piloting deposit token systems.