JPMorgan Chase’s foray into the blockchain ecosystem continues, with the monetary establishment selecting the Base community to pilot its newly launched deposit token, JPMD.
The pilot program was confirmed by Naveen Mallela, an government at JPMorgan’s blockchain division, Kinexys, who advised Bloomberg {that a} fastened quantity of JPMD tokens will probably be transferred to crypto alternate Coinbase within the coming days.
The switch will probably be facilitated via Coinbase’s layer-2 blockchain, Base, which launched in 2023 and presently has the most important market share amongst Ethereum layer-2s, in line with CoinGecko.
Mallela mentioned the transaction will probably be denominated in US {dollars}, with further currencies supported after regulatory approval is granted.
Upon completion of the pilot part, which is anticipated to span a number of months, Coinbase’s institutional shoppers will achieve entry to JPMD for transactions, in line with Mallela.
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Deposit tokens are “superior” to stablecoins
The pilot testing was introduced days after JPMorgan filed a trademark utility for JPMD, which outlined a variety of crypto-related companies, together with digital asset buying and selling, transfers and cost processing.
Deposit tokens, particularly, signify greenback deposits held in prospects’ financial institution accounts. Not like stablecoins — digital representations of fiat currencies backed by money and money equivalents — deposit tokens function throughout the conventional banking framework.
“From an institutional standpoint, deposit tokens are a superior various to stablecoins,” Mallela advised Bloomberg, noting that their fractional reserve backing makes them extra scalable.
The chief famous that JPMD may probably pay curiosity sooner or later, setting it other than most stablecoins, which usually don’t generate yield.
Nonetheless, yield-bearing stablecoins could achieve momentum over time, with some business insiders suggesting that the highly effective US banking foyer is “panicking” over their potential to disrupt conventional monetary fashions.
Based on sources near the banking foyer, New York College professor Austin Campbell mentioned banking executives concern they are going to be “harmed” by the rise of yield-bearing stablecoins.
