JPM Mulls Blockchain-Based Digital Deposit Token
By Laxmikant Khanvilkar
Of late, we have observed pick-up in institutional activity in virtual digital assets (VDAs) after the US Federal court mandated the SEC to revisit its prior rejection of Grayscale’s bid to convert its BTC Trust (GBTC) into spot ETF.
JPMorgan Chase & Co., universal bank and financial services, is actively exploring options in this space. As per recent media reports, the New York headquartered company is in the early phases of exploring a blockchain-based digital deposit token.
The aim is to expedite cross-border payments and settlements.
According to Bloomberg report, the US-based bank has laid the groundwork for the necessary infrastructure for this innovative payment method. However, the creation of the token hinges on obtaining approval from regulatory authorities in the US.
In essence, deposit tokens are digital coins that represent a deposit claim against a commercial bank, mirroring the deposits held by customers in their accounts. Transactions involving these tokens are processed on blockchain technology, resulting in instantaneous settlement. Advocates of this emerging form of digital currency also argue that it could potentially reduce transaction costs.
The bank had previously tested issuing deposit tokens in a single transaction in 2022 as part of the Monetary Authority of Singapore’s Project Guardian, and underscored the potential of this form of currency in a recent study.
Bloomberg reports that this move signifies an expansion of JPMorgan’s blockchain initiatives, which have been at the forefront of Wall Street’s efforts to leverage blockchain technology to streamline certain cumbersome banking processes.
In addition to this initiative, JPMorgan has already developed several applications utilising blockchain technology, including JPM Coin, which was introduced in 2019. JPM Coin facilitates the movement of dollars and euros among certain JPMorgan corporate clients within the financial institution.
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