JPMorgan Chase, the biggest U.S. bank by assets, may soon create a blockchain-based “deposit token” for customers to use—as long as regulators are on board.
Deposit tokens act as a digital version of a person’s deposits in a bank. The bank is still in early stages of exploring the concept, according to Bloomberg, but the blockchain technology backing a deposit token could allow for instantaneous payment settlements and cheaper transactions.
Most of the infrastructure to run the token is already in place, and the company may launch it in less than a year—after it’s approved—Bloomberg reported, citing a confidential source.
“Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly,” a JPMorgan spokesperson told Bloomberg.
Despite CEO Jamie Dimon’s disdain for crypto, the company has been among the leaders in experimenting with blockchain and metaverse technology when it comes to traditional financial firms.
The bank created the blockchain-based “JPM Coin” in 2019 to allow some corporate clients to move euros and dollars internally. The coin has been used for some $300 billion worth of transactions, according to the bank, although that pales in comparison to the $10 trillion in transactions it processes daily, according to Bloomberg.
The new deposit token would likely be available in dollars at first, and would differ from “JPM Coin” because customers could use it to transfer funds between banks and for the settlement of tokenized securities—financial vehicles recorded on the blockchain.
Although it is similar, the JPM deposit token would not serve to replace stablecoins like Tether and USDC, which are designed to maintain their peg to the U.S. dollar. The token would also likely be limited to the traditional financial system.