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JP Morgan Chase is planning to launch JPMD, a deposit token that serves as the banking giant's alternative to traditional stablecoins, according to CNBC.
The U.S. banking giant told CNBC on Tuesday that it plans to launch the deposit token on Coinbase's public blockchain Base, which operates on the Ethereum network. Each deposit token is designed to serve as a digital representation of commercial bank money, offering clients round-the-clock settlement and the ability to pay interest to holders.
Unlike publicly available stablecoins, JPMD will operate as a permissioned token, restricting access to JP Morgan's institutional clients only.
"We see institutions using JPMD for onchain digital asset settlement solutions as well as for making cross-border business-to-business transactions," Naveen Mallela, global co-head of Kinexys, JPMorgan's blockchain unit, told CNBC. "Given the fact that deposit tokens would eventually be interest bearing as well, this would provide better fungibility with existing deposit products that institutions currently use."
JP Morgan said the benefit of launching a deposit token over a stablecoin is that it gives institutional clients a way to move money around faster and easier while still having a close connection with traditional banking systems.
Traditional stablecoins like Tether's USDT and Circle's USDC are designed to maintain a 1:1 peg with fiat currencies. The entire stablecoin market is worth approximately $262 billion, according to data from CoinGecko.
JP Morgan's digital asset chief told CNBC that the bank chose Coinbase as its blockchain partner since the crypto exchange is already a long-standing client and a leader in the crypto space.
JPMD has had "preliminary interest from large institutional players who want more native onchain cash solutions from pre-eminent and reputed financial institutions," Mallela said.
