The test will transfer a fixed amount of JPMD from the bank’s digital wallet to Coinbase, making the token available to selected institutional users for payments and settlements.
Coinbase’s institutional clients will then employ JPMD for on-chain transactions. JPMorgan anticipates that the trial will run for several months before being expanded to other client segments and additional currency denominations, pending regulatory approval.
JPMD represents a claim on deposits held at the bank and differs from stablecoins that rely on segregated securities reserves.
Mallela called deposit tokens “a superior alternative” for institutions because they operate inside the fractional-reserve banking system, may earn interest, and could qualify for deposit insurance.
JPMorgan already clears more than $2 billion a day over its private Kinexys Digital Payments network, formerly JPM Coin.
“It will be the first token of its kind on a public blockchain, enabling fast, secure, 24/7 money movement between trusted parties. […] Moving money should take seconds, not days. Commercial banking is coming on-chain.”
According to Mallela, JPMorgan’s whitepaper on deposit tokens argues that commercial bank money already accounts for more than 90% of circulating funds and will likely assume a comparable share in digital form.
Furthermore, JPMorgan expects institutional demand for a bank-issued alternative to stablecoins to drive early use of JPMD.
Pending a successful pilot and regulator clearance, the bank intends to scale issuance volumes and add currency options, positioning deposit tokens as a core tool for cross-border settlement and on-chain liquidity management.
