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News/JPMorgan Sets Sights on Blockchain Payment Revolution

JPMorgan Sets Sights on Blockchain Payment Revolution

Sep 8 2023

9 months ago2 minutes read
Robot pushing Blockchain Payments button in futuristic JPMorgan setting

Marching Towards a Blockchain-Based Financial Future 

Written by Van

JPMorgan Chase & Co. is pushing its boundaries by initiating experiments in blockchain-based deposit tokens. This endeavor is poised to shift gears and turbocharge transaction speeds, slashing transaction costs concurrently.

Digging deep into their strategy, the bank has already fashioned a considerable chunk of the required infrastructure. But, they're yet to get the green signal from US regulators to proceed. Albeit, once they get regulatory acquiescence, they’re hoping to go live within the span of a single year.


The Mechanism of Deposit Tokens

The deposit token is envisaged as a digital mirror of a customer's deposits. This innovative tool has potential applications. From transferring funds to users with accounts in different banks, to facilitating the settlement of tokenized securities, the possibilities are extensive. 

Transforming transactions, the deposit token can render 24/7 operations, transcending physical bank hours. This promises to revolutionize the world of banking with a much-lauded increase in efficiency.


Previous Trials and Errors in Blockchain

JP Morgan isn’t new to the world of blockchain. Their adventurous venture into an unchartered realm saw them enter into a unique collusion with the Monetary Authority of Singapore in the preceding year. As stated by Umar Farooq, the CEO of JPMorgan’s web3 arm, Onyx, the digitization of commercial bank money builds upon existing deposit procedures. 

With JPM Coin, introduced in 2019, the bank has navigated the volatile waters of crypto coin prices, successfully handling transactions worth around $300 billion.


Defining Deposit Tokens

Digital vault opening to reveal glowing deposit tokens with financial icons (1).webp

JPMorgan branches deposit tokens into three categories. The JPM coin pertains to payments within JPMorgan. Partior is focused on interbank payments on a mutually shared ledger, while the third facilitates interbank payments on a public blockchain. 

In May, JPMorgan received the thumbs-up from the OCC to utilize the Partior network designed for corporate payments. Anticipated participant banks include DBS Bank and Standard Chartered, with Deutsche Bank and Japan’s SMBC projected to join soon.


Steering Through Regulatory Scrutiny

However, the journey to blockchain innovation isn’t smooth. With regulators exhibiting hesitance towards public blockchains, the USDF Consortium transitioned to a private blockchain to meet regulatory standards.

Moreover, the ongoing Regulated Liability Network (RLN) project, following its U.S. trial, has extended its reach to the UK. While U.S. stablecoin legislation indirectly does cover deposit tokens, it lacks explicit permission for their use.


A Deep Dive into the Crypto Market

Perusing through cryptocurrency charts and understanding the Ethereum market cap and crypto price fluctuations are a testament to the growing importance of blockchain and crypto coins. As JPMorgan Chase gets a grip on cryptocurrency charts and trends, a new era for the banking world is on the horizon. 

The big scoop here is that JPMorgan is diving headfirst into the future of banking, keeping a keen eye on crypto price movements as they innovate. The introduction of blockchain-based deposit tokens promises to elevate convenience, efficiency, and speed of financial transactions. Now, the only speed bump remains regulatory approval. 


FAQs

1. What is the main objective of JPMorgan Chase's blockchain-based deposit token project?

The primary focus of the project is to achieve faster transaction speeds and lower transaction costs.

2. How could JPMorgan Chase's deposit token system benefit customers?

This system enables round-the-clock transactions and could significantly reduce costs.

3. What was the goal of JPMorgan launching its own cryptocurrency, JPM Coin?

JPM Coin was designed to facilitate intra-JPMorgan payments, and as of June, it has processed transactions worth approximately $300 billion. 

4. What were the three types of deposit tokens identified by JPMorgan's Onyx Division?

The Onyx Division recognizes JPM Coin for intra-JPMorgan payments, Partior for interbank payments on a shared ledger, and a yet-to-be-named coin for interbank transactions on public blockchains. 

5. What was the status of the regulatory approval for JPMorgan's blockchain-based deposit token project?

The project is yet to receive the required approval from U.S. regulators. Once obtained, the bank intends to roll out the system within a year.

This article has been refined and enhanced by ChatGPT.

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