JPMorgan to pilot deposit token on Coinbase-linked blockchain – report

JPMorgan Chase (NYSE:JPM) will conduct a pilot program for a token that represents dollar deposits at the bank, according to a media report on Tuesday, further evidence of large financial institutions venturing further into digital assets.

Naveen Mallela, global co-head of JPMorgan’s (NYSE:JPM) blockchain division Kinexys by JPM Morgan, told Bloomberg News that, within days, JPMorgan (JPM) will move a fixed amount of the JPMD tokens from the bank’s digital wallet to Coinbase Global (NASDAQ:COIN), the U.S.’s largest crypto exchange.

The token issuance and transfer will take place on Coinbase-affiliated public blockchain Base and will be denominated in dollars, Mallela said. After that, Coinbase’s (NASDAQ:COIN) institutional clients will be allowed to use the deposit tokens for transactions.

JPMorgan (JPM) plans to run the pilot for several months, then expand it to other users and currency denominations, subject to regulator approvals, Mallela said. The deposit tokens “are a superior alternative to stablecoins,” for institutional clients because they’re based on fractional banking, which is more scalable, he said.

Deposit tokens like JPMD could be interest-bearing in the future and covered by deposit insurance, while current stablecoins aren’t, Mallela added.

JPMorgan Chase (JPM) stock slipped 0.4% in late Tuesday trading. Coinbase (COIN) stock slid 3.1% on the same day that bitcoin (BTC-USD) dropped 1.5% to $105.2K.