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JPMorgan Chase & Co is launching a pilot for a token named JPMD, which represents dollar deposits, marking a significant step in the bank’s digital asset strategy. In the coming days, a fixed amount of JPMD will be transferred from the bank’s digital wallet to Coinbase Global Inc, the largest US crypto exchange, via the public blockchain Base.
Naveen Mallela, Global Co-Head Kinexys by JPMorgan
The token issuance and transfer will be denominated in US dollars. Naveen Mallela, Global Co-Head of the Bank’s Blockchain Division Kinexys by JPMorgan, stated that institutional clients will be able to use the deposit tokens for transactions, with plans to expand to other users and currency denominations, pending regulatory approval.
This pilot is part of a broader trend among global banks and multinational companies, including Banco Santander, Deutsche Bank, and PayPal Inc, who are exploring digital assets to make payments faster and cheaper. The pilot also coincides with US legislative developments on stablecoins, which are expected to drive further adoption of digital money.
Deposit tokens are transferable digital coins representing a deposit claim against a commercial bank, functioning as digital versions of the deposits customers hold in their accounts. They differ from stablecoins, which are typically backed one-to-one by a basket of securities such as Treasuries or other highly liquid assets.
Mallela said, “From an institutional standpoint, deposit tokens are a superior alternative to stablecoins. Because they are based on fractional banking, we think it is more scalable.” He added that deposit tokens like JPMD could be interest-bearing in the future and covered by deposit insurance, unlike most major stablecoins.
The JPMD pilot expands JPMorgan’s use of digital-asset products beyond its internal systems. The bank already operates the Kinexys Digital Payments network, formerly JPM Coin, enabling corporate clients to move dollars, euros, and pounds between their accounts. Kinexys processes over $2 billion in daily transactions, a small portion of the approximately $10 trillion handled daily by JPMorgan’s payments division.
Mallela noted that the Kinexys network will continue to run and grow alongside the new token, with each expected to serve different user bases initially. The expectation is that JPMD will be more popular among clients seeking a commercial bank-backed alternative to stablecoins.
JPMorgan has been exploring deposit tokens for several years as a means to speed up cross-border payments and settlements. In a previous white paper, the bank stated that “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.”
The JPMD pilot also supports Base, a public blockchain linked to the Ethereum network, built initially within Coinbase and launched in 2023. Base has rapidly gained users and assets, becoming a leading Layer 2 blockchain with nearly $4 billion locked in applications ranging from finance to gaming. Its appeal lies in low transaction fees and fast speeds.
Mallela commented, “It’s the first time that a commercial bank is putting commercial money, a deposit-based product, on a public chain and we are starting with Base.”
While banks have historically avoided public blockchains due to regulatory concerns, there has been a shift in the US regulatory environment during President Donald Trump’s second administration. JPMD, while designed to run on public blockchains, will remain a permissioned token available only to JPMorgan institutional clients.
