JPMorgan Chase’s entry into the blockchain ecosystem continues, with financial institutions choosing a base network to pilot the newly launched deposit token JPMD.
The pilot program was confirmed by Naveen Mallawa, executive of the JPMorgan Blockchain division of Kinexys. He told Bloomberg that a certain amount of JPMD tokens will be transferred to Crypto Exchange Coinbase in the next few days.
According to Coingecko, the transfer will be promoted through Base, Coinbase’s Layer 2 blockchain, which was launched in 2023 and now has the largest market share of Ethereum Layer-2.
Mallea said the deal will be sected in the US dollar and will support additional currencies after regulatory approval is granted.
According to Mallea, Coinbase institution clients will have access to JPMD after the months of pilot phase is completed.
Related: Base approaches 1,000 TPS for a short time, increasing competitiveness with Solana
Deposit tokens are “better” than stubcoins
The pilot test was announced a few days after JPMorgan submitted its trademark application to JPMD. It outlined a variety of crypto-related services, including digital asset transactions, transfers, and payment processing.
Specifically, a token represents a dollar deposit held in a customer’s bank account. Unlike Stablecoins, a digital representation of cash and cash-backed Fiat currency – deposit tokens operate within the traditional banking framework.
“From an institutional standpoint, deposit tokens are a great alternative to stubcoins,” Malarena told Bloomberg, saying they would make them more scalable due to the backing of their fractional reserves.
The executive pointed out that JPMD could potentially pay interest in the future and could set it apart from most ridiculous things that normally don’t produce yields.
However, stubcoins containing harvests could gain momentum over time, suggesting that some industry insiders are “panic” about the possibility that strong US bank lobbies could disrupt traditional financial models.
Sources close to the bank’s lobby said New York University professor Austin Campbell said bank executives feared they would “harm” the rise of ridiculous stubcoins that hold the yield.
