JPMorgan Chase, the largest bank in America by assets, is looking at a blockchain-based deposit token for international payments and interbank transfers. The banking behemoth may develop the digital asset, which would differ from its current JPM Coin in that it could be used to transmit money to accounts at other banks, if authorities accept it.
For cross-border payments and settlement, JPMorgan is considering using digital tokens.
According to Bloomberg, which cited a source with knowledge of the situation, JPMorgan is in the early phases of investigating a blockchain-based digital deposit token. The token might be applied to hasten international payments and settlement.
The majority of the supporting infrastructure required to execute the new payment method has been established, claims the source who wished to remain unnamed. The token won't, however, be released without U.S. regulatory permission.
The article reveals that the bank may introduce it and make it available to business clients in less than a year after receiving approval. Deposit tokens were already released by JPMorgan as part of Project Guardian by the Monetary Authority of Singapore last year, and a research highlighted their potential.
***In the same way that commercial bank money in the form of bank deposits currently makes up over 90% of the circulating money, we anticipate that deposit tokens will become a commonly used form of money inside the digital asset ecosystem.***
Deposit tokens serve as a digital representation of the deposits that consumers hold in their accounts and serve as a claim against commercial banks. The tokens can be transferred, and because a blockchain is used to execute transactions, settlement may be immediate and possibly less expensive. According to a JPMorgan spokesperson's clarification,
***Deposit tokens provide a lot of potential advantages, but we also see the need for regulators to exercise caution and consideration. Our blockchain infrastructure would be able to enable the introduction of deposit tokens quite fast should that appetite materialize.***
According to the study, JPMorgan has been in the forefront of Wall Street's efforts to use the technology that powers cryptocurrency. The financial goliath's activities in the blockchain space would increase with the release of a deposit token.
JPMorgan has created a number of blockchain-based apps to date, including the JPM Coin, which was unveiled a few years ago. It enables a few of the financial institution's corporate customers to transfer dollars and euros between their various bank accounts.
A deposit token would be different in that it would be simple to transfer money to customers of other banks, according to Bloomberg's source. Additionally, it can help with the settlement of transactions involving tokenized securities or other financial products produced on a blockchain.
The token, whose users are subject to KYC and other checks, would probably be first priced in U.S. dollars but might eventually be made accessible in other fiat currencies. It should also be stressed that its goal would not be to buy cryptocurrencies or displace stablecoins tied to fiat.
Do you believe JPMorgan will obtain regulatory approval before releasing a digital deposit token? Let us know what you're hoping for in the comments area.