JPMorgan launches first public pilot project with a “deposit token” called JPMD. The project backs a cryptocurrency on the Ethereum Layer-2 solution Base with deposits held at the US bank.
JPMorgan & Chase is launching a pilot trial of a new digital token called JPMD. The cryptocurrency is designed to represent US dollar cash deposits, fully backed at a 1:1 ratio. The token will be transferred and tested via the Base network, a Layer‑2 chain by the crypto exchange Coinbase, with institutional clients.
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Difference between stablecoins and a deposit token
Traditional stablecoins are typically backed by cash equivalents such as US Treasuries. The JPMD token, by contrast, is directly backed by bank deposits at regulated institutions. According to Naveen Mallela, Global Co-Head of Kinexys (JPMorgan), deposit tokens are “a superior alternative to stablecoins” – more scalable, potentially interest-bearing, and in the future possibly even combined with deposit insurance.
The pilot project involves transferring a fixed amount of JPMD from JPMorgan onto the Base network – serving as a test run for international and decentralized use by institutional investors.
Traditional financial institutions on the blockchain
The JPMD test run marks a significant step in the integration of traditional banks and public blockchains. JPMorgan already uses its internal Kinexys network (formerly JPM Coin) for internal payments and settlements. JPMD, however, now opens this system to external blockchain ecosystems.
The stated goal: to provide institutional clients with 24/7 access to liquid, blockchain-based money – with lower fees and greater transparency than traditional wire transfers.
The pilot will run for several months, after which an expansion to additional currencies and clients is planned – provided regulators are on board. If the proof of concept is successful, JPMD could serve as a model for other banks, brokers, and existing cryptocurrency platforms viewing deposit tokens as a secure alternative to stablecoins.
Switzerland falling behind
Stablecoins remain one of the most successful applications of blockchain technology to date. Unfortunately, Switzerland is falling behind. On the one hand, the lack of legal certainty due to the questionable stance of the Swiss Financial Market Supervisory Authority (FINMA) contrasts sharply with the clarity other digital assets enjoy. In practice, it is currently not possible for a Swiss institution to issue a stablecoin. The Federal Council’s new legislative proposal, expected this autumn, is therefore urgently needed.
On the other hand, established Swiss banks remain hesitant. While PostFinance, Swissquote, and four cantonal banks offer trading and custody of cryptocurrencies, the elephant in the room – UBS – is missing the trend. And services beyond “execution-only” remain rare. When asked by CVJ.CH, a spokesperson for ZKB said that the bank currently has no plans for similar projects with its own stablecoins. UBS did not respond to an inquiry.
