JPMorgan sees advantages in deposit tokens Issued by banks

  • JP Morgan released a report and believes that virtual assets like cryptocurrencies could be more widely used than stable coins.
  •  The report’s authors outlined that the regulation contributes to trust, decreases the risk of running on deposit tokens and ensures credibility.

According to a report released on February 9, 2023, by JP Morgan and its consultant firm Oliver Wyman shows that a possible new form of virtual money – deposit tokens issued by commercial banks on the blockchain – could be more widely used than stable coins.

According to a published report by Oliver Wyman, commercial banks could play a significant role in digital currency by issuing tokens. The token issued will act as the same deposit claimed as a bank balance, but its record will be registered on a blockchain and used for cross-border payments or on a decentralized finance ecosystem.

About JPMorgan

The largest bank in the United States and the world’s largest bank according to market capitalization has been exploring the use of blockchain technology for several years. As reported in 2019, JPMorgan launched JPM Coin, which allows transferring funds within a bank on a confidential blockchain. Again in 2021, it merged with Singapore-based Temasek Holdings Pte and DBS Group Holdings to form Partier, which enables payments between financial institutions.

The report was written by Leo Sizaret, Consultant at Oliver Wyman, James Emmet, senior advisor at Oliver Wyman and many others. The report’s authors outlined that the regulation contributes to trust, decreases the risk of running on deposit tokens and ensures credibility. 

Naveen Mallela, global head of coin systems for the JPMorgan Onyx blockchain subsidiary, mentioned, “We see this as a possible evolution of the product line.” Further, he added, “Deposit tokens is a way for well-regulated, well-supervised banks to provide a safe form of money for innovations in DeFi world, such as decentralized exchanges and lending protocols.” 

A partner at Oliver Wyman, Gokse Ozcan, believes that Gökse Ozcan, a partner at Oliver Wyman, believes that banks like economic and institutional-facing banks are interested in pushing for the token deposit. Mr.Mallela also confirmed that they would probably like to stay on Ethereum’s public blockchain, but after launching, they are open to several blockchains. 

Oliver Wyman is a universal leader in management consulting. With offices in more than 70 cities in 30 countries, Oliver Wyman combines deep industry knowledge with specialized expertise in strategy, operations, risk management and organizational transformation. The firm has more than 6,000 professionals worldwide who work with clients to optimize their businesses, improve their operations and risk profiles, and accelerate their organizational performance to capture the most attractive opportunities.

Onyx by JP Morgan is on the frontline of a significant financial services change. It is the first global bank to offer a blockchain-based platform for bulk payment transactions, helping to reshape the flow of money, information and assets worldwide.