April 19, 2024
JPMorgan's Deposit Token Built to Enhance Efficiency in Payments and Settlements
Latest Cryptocurrency News

JPMorgan’s Deposit Token Built to Enhance Efficiency in Payments and Settlements

According to Bloomberg, financial behemoth JPMorgan is entering the cryptocurrency world once more with a brand-new blockchain-based solution for international trade. However, the system won’t be accessible until the bank wins approval from American regulators.

The majority of the infrastructure required to host the new deposit token, which will initially be made available to business clients to speed up payments and settlements, has been built by JPMorgan. A depository institution issues deposit tokens on a blockchain to reflect a deposit position. Stablecoins, which are often issued by a private, non-bank business, contrast with the solution.

Additionally, the product differs from JPM Coin, which currently enables business clients to move dollars and euros between departments within the banking institution. The new deposit token, on the other hand, will permit transactions with other banks and is appropriate for other blockchain settlements, including trades of tokenized securities.

However, because its transactions would go through Know Your Customer and anti-fraud measures, the deposit token and the JPM Coin are equivalent in terms of compliance. The new coin was tested out in a single transaction last year as part of Project Guardian, a cross-industry collaboration initiative started by the Monetary Authority of Singapore in Singapore.

“Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used,” a JPMorgan spokesperson said to Bloomberg in a statement, further adding that “should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly.” According to the research, JPMorgan does $10 trillion worth of transactions every day.

The bank has already shown support for deposit tokens. Deposit tokens may provide greater stability and dependability than comparable options like stablecoins and central bank digital currencies, according to JPMorgan’s February report.

With its deposit token project, JPMorgan not only broadens the scope of its blockchain-based services but also increases the level of rivalry among stablecoin issuers. PayPal is a significant participant that has jumped into the fight for quicker settlements supported by cryptocurrencies. To increase adoption, Circle expanded the scope of its stablecoin USD Coin to six other blockchains after the fintech company PayPal USD debuted its stablecoin in early August.

Image: Wikimedia Commons

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