JP Morgan Explores Blockchain-Based Deposit Token for Faster Cross-Border Settlements: Report

American financial services giant JP Morgan is exploring a new type of token that will speed up its cross-border payments and settlements.

People familiar with the matter told Bloomberg that the multinational financial services firm has developed most of the underlying infrastructure needed to launch a deposit token. However, the firm is waiting for approval from U.S. regulators.

JP Morgan to Launch Deposit Token

A deposit token is a digital coin that serves as a deposit claim against a commercial bank. They act as digital versions of the deposits held in customers’ accounts. The token may first be denominated in dollars and then become available in other fiat currencies over time.

JP Morgan does not intend to use the token as a replacement for stablecoins or for the purchase of cryptocurrencies. While stablecoins are designated for settlements in the crypto sector, deposit tokens serve similar functions in the traditional financial system.

If JP Morgan receives a regulatory nod, the bank may launch the token for corporate clients within a year. The firm is looking to make traditional settlements instantaneous and cheaper with the new product.

“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. Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly,” said a JPMorgan spokesperson.

Exploring the Potential of Deposit Tokens

Launching a deposit token would be a significant step in JP Morgan’s blockchain plans. In 2022, the bank partnered with the Monetary Authority of Singapore on its Project Guardian to test the feasibility of applications in asset tokenization. During the pilot program, the duo examined the representation of securities using tokenized deposits issued by deposit-taking institutions on public blockchains.

In a study conducted earlier this year, JP Morgan highlighted the potential embedded in deposit tokens. The bank said such tokens could become a widely used form of money within the digital asset ecosystem and may even become more widely used by stablecoins.

Notably, the deposit token would not function in the same way as JP Morgan’s JPM Coin, which was developed in 2019 to allow corporate clients to move their dollars and euros. The token’s infrastructure would be linked to the bank’s compliance systems.