JPMorgan Chase & Co., one of the most well-established financial institutions in the world, is reportedly developing a new blockchain-powered deposit token for cross-border transactions and settlements. Bloomberg first reported the exploration on August 8.
With this move, the banking giant aims to accelerate cross-border settlement processes. The new deposit token will target enterprise clients at the beginning. JPMorgan previously introduced the JPM Coin as a solution for instantaneous transactions between the bank’s customers.
The deposit token, on the other hand, has similar functionality as stablecoin and central bank digital currency (CBDC) designed to transfer funds among banks externally or for encrypted assets.
JPM Wants Into Cryptos!
According to a source familiar with the matter, the bank is in the final phase of infrastructure development, which includes the deposit feature. However, the implementation can only be proceeded under the approval of the US government. If approved, the organization could launch the project for corporate customers within the next year.
“The new token would allow for faster cross-border payments and settlements. In fact, JP Morgan has reportedly built the infrastructure needed to handle transactions for the token,” per Bloomberg.
The new development reportedly aligns with JPMorgan’s established collaboration with the Monetary Authority of Singapore, wherein they have been engaged in the testing of a deposit token payment system since last year.
Umar Farooq, Global Head of Financial Institution Payments at JPMorgan, said that the firm will continue to develop blockchain-based solutions to streamline financial services and sees this as the next step in the digitalization of the banking industry.
JPMorgan was among the pioneering financial institutions that explored the application of blockchain technology. The launch of JPM Coin in 2019 marked a major step into the sector. The innovative technology behind JPM Coin lets them help customers make transactions in Euros.
After the news broke out, Bitcoin experienced a minor rebound in value. Its price climbed from $25,500 to $26,500 during the day. Altcoins haven’t demonstrated significant responses to this movement.
The Future is On-chain
JPMorgan’s new initiative will likely fuel the competition among stablecoin issuers. One of the largest payment giants, PayPal recently joined the race with the introduction of its stablecoin PayPal USD (PYUSD) in August.
The stablecoin landscape is currently under the dominance of Tether (USDT) and Circle (USDC). Apart from those two players, other stablecoins like DAI or BUSD also have a solid position. Circle recently expanded its partnership with Coinbase, the largest cryptocurrency exchange in the US, to work on the stablecoin’s expansion on six new blockchains.
But JPMorgan’s proactive approach will not just impact the stablecoin sector. Many believe the move additionally rivals Ripple (XRP). XRP Ledger by Ripple Labs has been known as the underlying technology to facilitate fast and low-cost cross-border transactions.
XRP has a head start in the market and has established partnerships with a range of financial institutions and payment providers. With Ripple’s recent victory over the US SEC, the firm aims to onboard more banks and institutions in the work.
JPMorgan’s new deposit token potentially competes with XRP since both entities target to settle international transactions quickly and efficiently. The bank’s reputation and trust among institutional clients could make its token appealing for large enterprises and banks looking for a reliable and regulated solution.
Ripple’s CTO recently hinted at upcoming news for the Ripple party. The details are under wraps, but there’s speculation about a possible SEC settlement announcement, a crucial development for Ripple. Another intriguing possibility is Ripple going public through an IPO, a significant step toward becoming a more traditional company with new growth prospects.
Of course, everyone knows that JP Morgan is a part of the central bank cartel, which may impact the value of anything it develops going forward.