JPMD is deployed on the Base blockchain supported by Coinbase and will be piloted for several months, potentially featuring interest-earning capabilities in the future. The launch of JPMD is not a hasty decision; as early as 2023, JPMorgan began researching the feasibility of deposit Tokens in its blockchain division, Kinexys.

On June 18, JPMorgan announced that it will pilot a deposit token called JPMD, deployed on the Base blockchain supported by Coinbase. It is expected that in the coming days, JPMorgan will transfer a certain amount of JPMD from its digital wallet to Coinbase, the largest cryptocurrency exchange in the United States.

Initially, the token is only available for institutional clients of JPMorgan, and it will gradually expand to a broader user base and more coins after receiving regulatory approval in the United States.

JPMD will be piloted for several months and may have interest-bearing capabilities in the future.

The launch of JPMD is not a hasty move. As early as 2023, JPMorgan had begun researching the feasibility of deposit tokens within its blockchain division, Kinexys. Just a day before the announcement of the JPMD pilot, it was discovered that the bank had applied for the “JPMD” trademark, which covers functions such as cryptocurrency trading, payments, and custody. At that time, there was speculation that this would signal JPMorgan’s entry into the stablecoin market.

However, JPMorgan has chosen not to issue stablecoins, but instead emphasizes “deposit tokens” as a more robust and regulated alternative.

Naveen Mallela, the global co-head of Kinexys, JPMorgan’s blockchain division, stated in an interview with Bloomberg that the issuance and transfer of the Token will take place on Coinbase-affiliated public blockchain Base and will be priced in USD. In the future, Coinbase’s institutional clients will be able to trade using this deposit Token. He added that JPMorgan plans to run the pilot for several months and gradually expand to other users and currency types after obtaining regulatory approval.

Mallela stated: “From an institutional perspective, deposit tokens are a superior alternative to stablecoins. Because they are based on a fractional reserve banking system, we believe they are more scalable.” He pointed out that deposit tokens like JPMD may have interest-bearing features in the future and could potentially be included in deposit insurance, whereas mainstream stablecoins typically do not possess these characteristics.

The JPMD pilot means that the bank is expanding the use of digital asset products beyond its internal systems. JPMorgan has been at the forefront of Wall Street’s push for the application of blockchain technology and is currently operating a network called Kinexys Digital Payments (formerly JPM Coin), which allows corporate clients to transfer US dollars, euros, and British pounds from their bank accounts.

According to Bloomberg, JPMorgan stated that after the network’s transaction volume grew tenfold last year, it now processes over $2 billion in transactions daily on average. However, this still represents only a small portion of the bank’s payment department’s total daily transaction volume of about $100 trillion.

Mallela stated that JPMorgan will continue to operate and expand the Kinexys Digital Payments network, but initially, it is expected that the user base of JPMD will differ, with JPMD likely to be more popular among clients seeking stablecoin alternatives supported by commercial banks.

The JPMD pilot also further supports the development of Base. “Funds transfer should be measured in seconds, not days,” Base stated in an announcement on the social media platform X on June 18, “Commercial banks are going on-chain.”

Although JPMD is designed to run on a public blockchain, Mallela stated that it will still be a permissioned Token, available only for use by JPMorgan’s institutional clients.

Is the stablecoin market “too crowded”? What are the differences between JPMD deposit tokens and stablecoins?

At the same time, another executive from JPMorgan expressed her concerns about the “overcrowded” stablecoin market at the DigiAssets 2025 conference held on June 17.

“I just think that as an industry, we all need to take a step back and think about whether we are ultimately going to make the market overly crowded or if we will see more fragmentation, as each company chooses to use its own (stablecoin),” said Emma Lovett, Executive Director at JPMorgan, at a conference in London. She oversees the company’s work in market distributed ledger technology and credit.

She stated that the market is currently “at the peak of stablecoin speculation.” However, she believes that “it will be very interesting to see how the market evolves in two to three years, such as who issues their own stablecoin and who uses which.”

In fact, in a white paper released a few years ago, JPMorgan introduced the meaning of deposit tokens and their differences from stablecoins. The institution stated that the ongoing development of blockchain technology in commercial applications is creating a demand for blockchain-native “cash equivalents,” which can serve as liquid payment means and value storage tools in a blockchain-native environment. So far, stablecoins have primarily fulfilled this demand.

However, at the same time, Deposit Tokens and Central Bank Digital Currency (CBDC) have become the focus of discussions about the optimal form of digital currency in the future. Deposit Tokens refer to transferable tokens issued on the blockchain by licensed deposit-taking institutions, representing the holder’s claim to deposits with the issuing institution. Given that Deposit Tokens are a form of commercial bank money presented in new technology, they naturally belong to the banking system and are subject to the regulations and oversight currently applicable to commercial banks.

Deposit tokens can support a variety of application scenarios, equivalent to the monetary functions of current commercial banks, including domestic and overseas payments, transactions and settlements, and the provision of cash collateral. Their token form can also enable new functionalities, such as programmability, instant and atomic settlements, thereby accelerating transaction speeds and automatically executing complex payment operations.

This white paper states that stablecoins have been an important financial innovation in recent years, and their development has driven the growth of the digital asset ecosystem. However, as on-chain trading activities continue to increase in scale and complexity, stablecoins may pose challenges to financial stability, monetary policy, and credit intermediation when used at scale.

JPMorgan believes that deposit tokens will become a widely used form of currency in the digital asset ecosystem, just as commercial bank money in the form of bank deposits accounts for more than 90% of circulating currency today. Their token form will benefit from connections to traditional banking infrastructure and existing regulatory protections, which have already supported the robust operation of commercial bank deposits.

In short, deposit tokens are transferable digital currencies that represent a claim on deposits with commercial banks. Essentially, it is a digital version of the deposits customers have in their accounts. It differs from stablecoins, which are tokens pegged to fiat currencies and are typically backed 1:1 by a basket of securities (such as government bonds or other highly liquid assets).

The Genius Act has been passed by the Senate, which will promote the adoption of stablecoins.

This round of stablecoin craze is largely driven by the advancement of the U.S. “GENIUS Act.” This is a bipartisan-supported bill aimed at establishing a regulatory framework for stablecoins and digital assets. At the same time, it is also incentivized by the listing of USDC issuer Circle.

On June 18, news came that the U.S. Senate passed the GENIUS Act for stablecoin regulation with 68 votes in favor and 30 against, and the bill will be sent to the House of Representatives for review. The bill establishes a federal regulatory framework for stablecoins, requiring one-to-one reserves, consumer protection, and anti-money laundering mechanisms.

At the DigiAssets 2025 conference in London, an executive from Franklin Templeton, an asset management company, stated that the EU could potentially become a “region being bypassed,” while the US and Asia are accelerating the pace of embracing the development of digital assets.

Overall, the launch of JPMD by JPMorgan is not only an important milestone in the bank’s blockchain strategy but also reflects that traditional financial institutions are accelerating the exploration of the future form of on-chain payments.

Currently, multinational financial and technology companies, including Spain’s Santander Bank, Deutsche Bank, and PayPal, are also trying to utilize blockchain technology to achieve more efficient and low-cost payment settlement services.

In the process of blockchain technology moving towards mainstream financial systems, deposit tokens issued by commercial banks, protected by regulatory frameworks, and connected with existing account systems may become the new standard for “on-chain cash” in this new phase. PANews will continue to monitor subsequent developments.

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