Deposit Tokens

Introducing J.P. Morgan Deposit Token (JPMD)

What is a Deposit Token? 

A Deposit Token is an electronic payment instrument issued by a bank, representing funds that have been deposited by a customer. It can be deployed on public and private blockchain networks and is intended to be transferable among the issuing bank’s direct customers as well as between their eligible customers.

Where is the Deposit Token issued?

For the pilot, JPMD is issued on Base, an Ethereum Layer 2 blockchain network built within Coinbase, and can be reached here to view the smart contract;

https://basescan.org/token/0x7e0aedc93d9f898be835a44bfca3842e52416b82

Please be aware that any tokens with the same or similar name but at different contract addresses are not affiliated with J.P. Morgan.

Why is Kinexys launching JPMD?

The JPMD pilot represents a continuation of Kinexys’ work in advancing digital money solutions, which began in 2019 on private permissioned blockchain infrastructure with Kinexys Digital Payments Blockchain Deposit Accounts. JPMD represents the first product to be offered by J.P. Morgan on public blockchain infrastructure, and will provide institutional clients a digital money alternative to stablecoins.

How is JPMD different from Kinexys’ Blockchain Deposit Accounts? 

Kinexys’ Blockchain Deposit Accounts are offered on Kinexys’ private permissioned blockchain for J.P. Morgan  institutional clients. JPMD is designed to be offered on external blockchains, including public blockchain environments and to  be held by eligible non-J.P. Morgan clients of J.P. Morgan institutional clients (though not in scope for this PoC).

How is JPMD different from a stablecoin?

JPMD – and Deposit Tokens in general – match the novel and distinctive properties of stablecoins, most notably the ability to conduct peer-to-peer transactions with programmability. As such, Deposit Tokens and stablecoins can be applied to similar use cases. However, Deposit Tokens differ from stablecoins in key areas including, interest payouts, and deposit treatment. Clients can treat JPMD as bank deposits on their balance sheet, providing certainty around financial and accounting treatment. Additionally, JPMD is integrated with J.P. Morgan’s traditional banking systems, thereby reducing liquidity silos for clients.

What are the use cases for Deposit Tokens?

Deposit Tokens enable native cash settlement on external public and private blockchain networks. As such, Deposit Tokens offer a solution for use cases including: facilitating payment for and redemption of digital assets such as tokenized money market funds; enabling 24/7/365 cross-border payments; and serving as on-chain collateral.

What benefits does JPMD offer clients?

JPMD provides J.P. Morgan’s institutional clients the ability to engage with public blockchain transactions using an on-chain cash solution that is seamlessly integrated into their existing banking infrastructure. From a payments standpoint, JPMD offers an efficient solution to the limitations of traditional financial infrastructure, offering 24/7/365 cross-border settlement with automated initiation triggers.

How is JPMD ensuring safety and soundness on the public blockchain?

JPMD is available only to approved-listed entities that are institutional customers of J.P. Morgan and is subject to the transaction monitoring and screening requirements that apply across J.P. Morgan. Therefore, as part of the PoC, JPMD cannot be transferred on the public blockchain to non-customers.

What are the objectives of the JPMD PoC?

With initial launch on Base, an Ethereum Layer 2 network built within Coinbase, the PoC is intended to demonstrate the following:

• Deployment of JPMC’s smart contracts on a public blockchain.
• Issuance, transfer, and redemption of JPMD.
• Trusted execution of JPMD transactions using approved-listed blockchain addresses.

Are JPM clients interested in joining the JPMD PoC? How do I express interest in joining if I’m an institutional client of J.P. Morgan?

Both financial institutions and non-bank financial institution clients have expressed interest to date. If you are an institutional client of J.P. Morgan in the US and you’re interested in joining, please contact your J.P. Morgan representative.

What is next for JPMD?

Following the pilot, J.P. Morgan will issue JPMD on one or more public chains with general availability of the product for its institutional clients, subject to internal review and continued engagement with our regulators. The product will remain focused on institutional clients. There are no plans to offer JPMD to retail clients at this time.