JPMorgan Expands into Crypto Space with New Blockchain Solution for Cross-Border Transactions.
Summary:
JPMorgan plans to introduce a new blockchain-based solution called deposit tokens for cross-border transactions. The bank has already developed the infrastructure for this system, which will initially be available to corporate clients to facilitate faster payments and settlements. The deposit tokens differ from stablecoins and JPM Coin, allowing transactions between banks and supporting various forms of settlements on a blockchain. JPMorgan's move adds competition to stablecoin issuers and expands its blockchain solutions.
JPMorgan, a major financial institution, is venturing further into the world of cryptocurrency with a new blockchain-based solution for cross-border transactions, according to Bloomberg. However, this system will only become available after receiving regulatory approval in the United States. JPMorgan has reportedly developed most of the necessary infrastructure for this new deposit token, which will initially be launched for corporate clients to facilitate faster payments and settlements. Unlike stablecoins, which are usually issued by private entities, deposit tokens are issued on a blockchain by a depository institution to represent a deposit position. It's important to note that this new product is distinct from JPM Coin, which already enables corporate clients to transfer dollars and euros within the institution. The deposit token will facilitate transactions with other banks and can be used for various types of settlements on a blockchain, including trades involving tokenized securities. Like the JPM Coin, the deposit token will also follow compliance measures such as know-your-customer and anti-fraud processes. Last year, the token was tested in a single transaction as part of Project Guardian, a collaborative effort led by the Monetary Authority of Singapore (MAS). JPMorgan spokesperson told Bloomberg that "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." If there is interest from regulators, JPMorgan's existing blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly. According to the report, JPMorgan currently handles $10 trillion in transactions daily. The bank has previously expressed support for deposit tokens, stating that they may offer greater stability and reliability compared to stablecoins and central bank digital currencies (CBDCs). This new initiative not only expands JPMorgan's blockchain solutions, but also increases competition for stablecoin issuers. PayPal, another major player, has recently entered the race for faster settlements powered by crypto tokens by launching its own stablecoin (PYUSD). This move has prompted traditional competitors like Circle to expand the reach of their stablecoin USD Coin (USDC) to six additional blockchains in an effort to boost adoption.
Published At
9/7/2023 9:45:00 PM
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