The largest U.S. bank, JPMorgan Chase & Co., is developing a blockchain infrastructure for digital deposit tokens. The financial instrument could be launched in a year and will be used to speed up international payments and settlements if approved by local regulators.
American financial giant JPMorgan Chase is actively developing an infrastructure based on distributed ledger technology (DLT) for international transactions, with digital deposit tokens as the main unit of settlement. This is reported by Bloomberg with reference to an anonymous source inside the company.
An employee at JPMorgan claims that the bank has developed DLT infrastructure for a new deposit token, which will initially be launched for corporate clients to speed up the process of payments and settlements between banks. These tokens will be issued on a blockchain by a depository institution to represent a deposit position.
However, while the infrastructure for issuing depository tokens is already in place, the bank will only start minting them after receiving approval from U.S. regulators. According to a JPMorgan spokesperson, the bank’s management understands that the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) will be careful and diligent in evaluating the potential benefits of the new financial instrument. Thus, tentatively, deposit tokens from JPMorgan could be launched within a year.
Initially, the deposit token will be denominated in U.S. dollars, but if approved by the relevant regulators, it may become available in other national currencies. The bank’s representative also noted that JPMorgan doesn’t see the new financial instrument as a full-fledged substitute for stablecoins, as the main purpose of deposit tokens is to use it for payments, settlements, and similar operations in the traditional financial system.
JPMorgan participated in the testing of the issuance and use of deposit tokens for cross-border transfers within Project Guardian. The bank’s analysts also concluded that deposit tokens are more stable than CBDCs or stablecoins.
