JP Morgan is pending approval for its blockchain-powered deposit token from U.S regulators in what it deems, a new method of faster transactions and lower costs. If U.S regulators approve JP Morgan’s digital deposit tokens, the investment bank will launch a new deposit feature for its corporate clients in a year. 

It bears mentioning that the digital deposit token differs from the JPM Coin, another cryptocurrency-based payments system JP Morgan announced in 2019. As per reports, the deposit token aims at facilitating the transfer of cash across clients in different banks. In addition, the reports claim that the digital deposit token will favour trade settlement in tokenized securities.

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A digital deposit token represents claims of deposit against a commercial bank. Industry experts have mentioned before that a deposit token has the potential to disrupt the traditional investment and financial system. For instance, the technology would facilitate instantaneous transactions via blockchain ledgers and speed settlements. This also has the ripple effect of reducing transaction costs.

According to sources, the bank is considering connecting its existing compliance infrastructure with the new token system so that it undergoes necessary regulatory checks and reporting. At the start, the new feature’s main denomination will be in US dollars. However, the bank aims to increase the number of available currencies and denominations as more regulators submit approvals. 


JP Morgan’s Past Involvement with Blockchain Technology

Even before that time in 2021 when JP Morgan CEO James Dimon said “I personally think Bitcoin is worthless’, the JP Morgan bank had on many occasions still suggested that it would roll out a blockchain-based digital payments system. 

JP Morgan first announced the JPM Coin in February 2019. In the year that followed, the investment bank created a new department unit for blockchain projects. In August 2020, the bank kicked off a wealth management relationship with clients who requested exposure to cryptocurrency assets. 

This made JP Morgan the very first bank in the United States to roll out its digital token targeting a real-world utility. Ever since the bank has been leading at the front on Wall Street through efforts to leverage the power of blockchain in streamlining banking processes. For this and many other reasons, JP Morgan rolled out the system for instantaneous transfer of payments across institutional client accounts. To date, the blockchain-powered system has processed over $300 billion in transactions. 


According to a 2021 blog post, ‘the JPM Coin is not money per se but a digital coin that represents the USD across designated accounts at the J.P Morgan Chase N.A. Hence, the JPM Coin carries a value equivalent to the US Dollar. In particular, the coin would facilitate instantaneous transfer of monetary value via blockchain technology. On the other end, the recipient had the ability to immediately redeem their JPM Coin crypto for US Dollars.

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In 2019, JP Morgan Bank announced its commitment to tokenizing the entire traditional finance. The days that followed saw the bank launch Onyx, the world’s first bank-led digital asset program, which as of now has been adopted at BNP Paribas, Goldman Sachs and DBS Bank. 

Why a major bank like JPMorgan is exploring blockchain technology

In evaluating the reasons why JP Morgan is exploring blockchain technology, a few would underestimate the power of blockchain technology in transforming digital payments. Blockchain is a decentralized ledger technology that enables secure transaction records, optimizes transparency, eliminates the reliance on trust and reduces cases of fraud. 


One of the main reasons why JPMorgan adopted blockchain technology was to optimize efficiency and speed up transactions. Traditional finance had an inconvenient model for processing global transactions in 3 – 5 business days. The bank saw blockchain technology as the best way to send money faster and save time for clients. 

The adoption of blockchain technology and the launch of the JPM Coin saw the company achieve maximum efficiency, cut costs and automate transactions. Advanced cryptography, which is a necessity in blockchain technology ensures that customer funds and data remain safe and secure.

As you can see, adopting cryptocurrency technology and blockchain in its operations has enabled JPMorgan to lead the front across leading traditional finance corporations that are entering the crypto space. Besides, the bank does not want to remain behind in an evolving industry where competitors are exploring the latest technology to avoid falling behind in payment innovation. 


Something else to note is that the entry of traditional finance giants delving into crypto could help streamline regulations. For instance, JPMorgan has already stated that the digital deposit token will be based on know-your-customer (KYC) and compliance systems.  The investment bank is keen on not causing friction between their new feature and regulatory officers. 

However, the company still needs to get approval from U.S. compliance authorities for the new digital deposit token before it launches. 

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How JPMorgan’s move influences other banks and financial institutions

JP Morgan Chase is among the world’s largest and most influential investment banks. For this reason, the bank has on many occasions set the industry tone for various innovation or compliance trends. Hence, a move like adopting blockchain and building a cryptocurrency must have a ripple effect across the entire industry. 

For example, other banks in the world could follow suit and expand their traditional finance model into the blockchain sector. Deploying the JPM Coin already had the competitive pressure to attract rival banks into innovative financial products. 

Another ripple effect would be the enhancement of regulations that favour cryptocurrencies and blockchain technology. This is possible because the bank’s effort will set the stage for compliance, clarity and oversight when dealing with digital currencies. 

JPMorgan’s fiscal perfomance also positions the bank as a key influencer towards the banking sector. Hence, anything the bank bends its back towards has the ability to attract increased investment from other financial institutions. 


Technology Adoption: JPMorgan has been at the forefront of adopting the latest technology, from machine learning, artificial intelligence, and nonfungible tokens to blockchain technology. Other institutions have already taken notice and gone on to accommodate innovative practices that are at par with industry trends. 

Challenges and risks JPMorgan might face in implementing blockchain solutions

Regulatory, interoperability, Security and reputational risks are some of the challenges that could face JPMorgan’s journey to implementing blockchain solutions. 

The regulatory environment for crypto is quick-evolving at a moment of increased industry scrutiny, complex jurisdictions and increasingly hostile oversight by authorities. Particularly, the use of cryptocurrencies by criminals and money launderers has often put crypto in bad records. For this reason, financial regulators have become wary of the technology and tightened their compliance requirements. 

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Interoperability issues are another limiting factor that JPMorgan might have to deal with when porting its blockchain technology software to other platforms, industries or partner banks. Again, the cryptocurrency industry is a risky business for companies or platforms handling customer funds due to increasing cases of hacks and funds theft. JPMorgan must have to invest in its security infrastructure so as to protect both customer funds and personal data. 

Recent news about JP Morgan 

  • JPM Coin

JPMorgan launched the JPM Coin in February 2019 as a way to process over $6 trillion of annual settlements between clients of its wholesale payments business. Mid this year in June 2023, JPMorgan announced the launch of their euro-denominated JPM Coin feature for corporate clients. According to the June 23 release, the bank would extend its JPM Coin platform to accommodate both U.S. dollars and euros. 

  • JP Morgan has expanded its blockchain payment platform JPM Coin to support the euro with Siemens as the first client

Two days after launching the euro-denominated JPM Coin, the company announced that it had processed the first transaction on the blockchain, which was a payment transaction for the German multinational conglomerate, Siemens. 

  • JPMorgan applies blockchain to interbank U.S. dollar transactions in India amid growing signs of global de-dollarization

On 5th June 2023, Bloomberg reported that JPMorgan Chase & Co. had partnered with 6 Indian financial institutions to help facilitate international transfers amidst the dollar’s growing concerns of imminent de-dollarizations.


How is J.P. Morgan using blockchain?

J.P. Morgan is leveraging blockchain technology in a bid to revolutionize the way money and assets move across the globe. For this reason, the traditional finance institution became the first bank to introduce a blockchain-based payment system based on the JPM Coin platform, Onyx and the upcoming digital deposit token. 

What is Onyx by J.P. Morgan?

Onyx by JPMorgan is the world’s first bank-led blockchain platform that facilitates the transfer of value, digital assets, and data through a secure decentralized ledger.  

Why is JPMorgan using blockchain?

The leading bank aims to leverage the power of a decentralized ledger to facilitate quicker, less costly and more transparent transactions. 

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