The media reported that JPMorgan is currently exploring the possibility of using blockchain technology to create a digital deposit token.
Insiders who told reporters about the potential plans of the giant of the American banking sector on the rights of anonymity say that the financial institution is studying the prospects of launching a token in terms of the impact of this decision on the speed of cross-border payment transactions and mutual settlements.
The media also reported that the lender has already developed the infrastructure necessary for the operation of an innovative payment system, for which working start the bank needs to get approval from regulators. If the authorities make a positive decision on this issue, the financial institution will launch a deposit token within a year, which corporate clients will be able to use.
The new token from JPM Coin, another blockchain-based system developed by the American banking giant, features a more convenient algorithm for transferring funds to clients of other lenders. Also, this solution is more convenient in the framework of settlements on transactions with tokenized securities issued on the blockchain.
Deposit tokens are digital coins and a requirement to deposit in a commercial bank, and also have the potential for a global transformation of the traditional financial system. For example, as a result of the use of blockchain technology, instant transaction processing is carried out. This advantage speeds up calculations and at the same time reduces the level of potential costs associated with such financial operations.
The new system, if launched, will be connected to the bank’s existing compliance systems. This will ensure that all transactions pass the necessary checks and reporting by regulators. Initially, the deposit token is likely to be denominated in dollars. At the same time, the subsequent availability of the digital coin in other fiat currencies cannot be ruled out if the appropriate approval is received from regulators.
JPMorgan is the first US banking giant to introduce its own virtual token for use in the real world. This financial institution was at the forefront of Wall Street’s actions aimed at using blockchain technology as a means of optimizing banking processes. In February 2019, the lender stated that the blockchain-based cryptocurrency is designed to ensure the instant implementation of payment transactions between institutional accounts.
In February 2023, the giant of the American banking system confirmed its commitment to efforts to tokenize the traditional space of finance. The lender made this statement against the background of significant turmoil in the sphere of cryptocurrencies.
At the same time, the Onyx digital asset banking program has already been used by Goldman Sachs, DBS Bank, and BNP Paribas. Also, 15 other financial institutions and broker-dealers have expressed their desire to join this program. Onyx representative Tyrone Labbone described tokenization as a killer app for traditional finance.
As we have reported earlier, JPMorgan Turns to Blockchain for Dollar Trades in India Hub.