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JPMorgan Builds Blockchain Infrastructure for Deposit Token that Speeds Up Cross-Border Payments and Settlements
Multinational bank and financial services giant JPMorgan (NYSE: JPM) is developing a blockchain deposit token to smoothen cross-border payments and settlements. According to a person familiar with the project, JPMorgan will use a digital deposit asset to quicken these payments.
A Bloomberg report notes that JPMorgan has already developed the framework that will power the payment. However, the banking giant has decided to suspend creating the token until regulators approve the project. The person familiar with the matter said JPMorgan will likely release the token to corporate clients within a year of regulatory approval. According to a JPMorgan spokesperson on the project:
“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.”
The spokesperson then added that “should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens. relatively quickly.”
JPMorgan’s Deposit Token is Different from the JPM Coin
JPMorgan has previously made efforts to adopt blockchain for its processes. In 2019, JPMorgan announced the JPM Coin, the first crypto asset developed by a banking institution. The bank explained that JPMorgan will use the coin to transfer assets, including securities and money, within the institution. In June, JPMorgan said it has used the JPM Coin to process nearly $300 billion worth of transactions since the launch in 2020.
The yet-to-be-released token will function differently from the JPM Coin. A deposit token represents a deposit made at a financial institution, confirming that the token’s worth exists in a customer’s bank account. Deploying deposit tokens on a blockchain will significantly speed up settlement since blockchain transactions can be immediate. This differs from the JPM Coin because it will facilitate transfers to other banks.
JPMorgan does not intend to use the deposit token for crypto trading or as a substitute for stablecoins. The bank’s deposit tokens will only function as a representation of actual deposits and will be used for payments and settlements.
Other JPMorgan Blockchain Efforts
JPMorgan’s efforts at blockchain adoption include several other milestones. The bank recently partnered with six Indian banks to settle interbank dollar transactions. In June, JPMorgan’s Asia Pacific Vice Chairman said the institutions will run a pilot project for a few months. The exec said this was necessary to properly test the tool before release. The aim is to settle dollar trades in real-time instead of the current process, which takes a while and only works on business days.
Last year, JPMorgan collaborated with payment gateway giant Visa to develop Confirm, a tool that validates payments using a peer-to-peer blockchain network. This tool helps to simplify the validation and approval of new accounts for cross-border payments. It also works to reduce the number of errors caused by incorrect or missing information.
Furthermore, JPMorgan developed the Quantum Key Distribution (QKD), a mechanism that protects blockchain networks from quantum attacks. QKD combines quantum mechanics and cryptography to allow parties to securely share data without the risk of third-party interference. JPMorgan created QKD with Toshiba and Ciena.
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JPMorgan Builds Blockchain Infrastructure for Deposit Token that Speeds Up Cross-Border Payments and Settlements