JPMorgan Chase has created a new digital currency called JPMorgan Deposit Token (JPMD) that lives on the blockchain and is only available to trusted institutions like large corporations, asset managers, and pension funds.
JPMD will cater to institutions that want the legal protections, interest payments, and bank integration that regular stablecoins don’t fully offer to move money quickly, safely, and around the clock.
JPMD combines traditional banking features with blockchain speed and access on a public blockchain (Base, built on Ethereum) to attract big institutions who fear stablecoins like USDC or USDT will raise concerns about regulation, stability, and trust.
But will deposit tokens like JPMD completely replace stablecoins for institutional use, or will they simply serve different purposes and grow side by side?
How are deposit tokens different from stablecoins?
Deposit tokens fit into commercial banks’ existing financial and legal framework because they come with added benefits, like deposit insurance, interest payments, and accounting clarity for managing large volumes of funds.
On the other hand, stablecoins don’t enjoy the same trust or integration with banks because the US Congress is still debating the rules around using and backing them.
In addition, the openness and availability of stablecoins for trading, remittances, lending, DeFi protocols, and as a fast way to store and move value across borders have helped them grow into a $260 billion market.
Constrastly, deposit coins set large transactions, enable tokenized securities, handle business-to-business payments, and manage digital cash in a way that ties back to a real-world bank account to serve the complex needs of institutions.
So, while stablecoins operate outside the bounds of traditional finance and serve a wide global audience, deposit tokens help the banks move money faster and more efficiently within the trusted, regulated walls of the banking system.
Why does JPMorgan believe JPMD is better for institutions?
JPMD combines the convenience of blockchain with the confidence and structure of commercial banking for institutional users who need digital money that moves fast but also complies with strict legal, financial, and operational standards.
JPMorgan hosts JPMD on the Base blockchain (a public Layer 2 network built by Coinbase on top of Ethereum) to protect it from misuse or unwanted exposure and allow only verified institutional clients to interact with the system.
This way, the bank creates access to faster settlements and lower fees while controlling who uses the token through permissioned access. The Base blockchain bridges JPMD to future blockchain use cases with its connection to Ethereum’s broader ecosystem.
Businesses can also use JPMD in treasury operations, accounting systems, and financial reports without the extra friction that comes with third-party stablecoins. This is because the token allows them to treat it like cash they already hold in their JPMorgan accounts.
Accountants, CFOs, and risk officers can easily trust, track, and report JPMD tokens because they are tied directly into the bank’s own infrastructure. This differs from stablecoins that sit outside the banking system and may raise questions about compliance or reserve backing.
JPMorgan also said JPMD will likely pay interest while still providing instant settlement and on-chain liquidity. This will make it more appealing as a long-term financial tool for institutions with large cash balances and wanting their funds to generate yield. The token may also become insured like bank deposits to reduce risk and offer a level of protection that stablecoins currently can’t match in high-value transactions.
Moreover, JPMD makes it easier for institutions to incorporate blockchain-based transactions without overhauling their internal workflows or facing delays due to incompatible systems. The token integrates seamlessly with enterprise treasury platforms, payment processing tools, and settlement engines. It also supports financial reporting systems to manage cash flow, settle trades, facilitate cross-border payments, and ensure regulatory compliance.
Businesses can also settle payments across jurisdictions instantly with JPMD to reduce delays, high costs, and limited operating hours in cross-border business-to-business (B2B) payments and tokenized asset settlements.
What could stop deposit tokens from taking over?
Deposit tokens have less potential as a universal digital cash solution because JPMD is only available to pre-approved institutional clients connected to the bank. While anyone with a crypto wallet can access and use stablecoins, the permissioned nature of deposit tokens prevents smaller businesses, startups, or individuals from accessing the token, despite it running on a public blockchain.
Banks using or issuing these tokens may face strict capital requirements and other compliance burdens. This is because current Basel guidelines classify digital tokens operating on public, permissionless blockchains as high-risk assets.