The New Collateral How JPMorgan’s Crypto Project Exceeds Legacy And Digital Finance

JPMorgan is coming out of the prototype phase and into actual on-chain banking. The bank recently introduced a permissioned USD deposit token for institutional customers JPMD and is deploying software that lets those clients transfer bank money onto public blockchains 24/7. And while that, reporting says, will let institutional customers use Bitcoin and Ether as collateral on loans under a custody, managed environment. Together, they indicate a concerted effort to move traditional bank balance-sheet business natively onto blockchains but keep it on regulated banking rails. (decrypt). Tokenised bank deposits allow institutional money to flow on-chain in real-time, rather than waiting for slow, business-hour-constrained settlement windows.The use of Bitcoin and Ether as collateral offers institutions another way to finance crypto exposure without the need to tap unregulated counterparties.By keeping tokens permissioned and anchored to covered deposits, JPMorgan places the technology as an adjunct to banking, rather than a replacement.You don’t have to be a crypto insider to feel the weight. Imagine your business could move USD between counterparties in seconds, around the clock, with the same legal protections you expect from bank deposits. That’s what JPMorgan’s deposit token proof-of-concept aims to demonstrate. The bank has placed JPMD on a public Layer-2 network, Coinbase’s Base, but access remains permissioned to institutional clients. This hybrid marries the composability and velocity of public blockchains with anti-money-laundering and know-your-customer controls.In the meantime, its suggestion that institutions can use Bitcoin and Ether as collateral for loans brings crypto assets onto a more responsible balance-sheet basis rather than as speculative fads. Rather than having clients go off-platform for crypto lending, JPMorgan is proposing a bank-regulated path through third-party custody and regulated lending practices. For corporate treasurers and fund managers, that kills frictions and diminishes legal uncertainty.Tokenised Deposits (JPMD): A deposit token is a tokenized on-chain form of USD deposits that can be routed between institutional wallets 24/7. It’s a permissioned token built as a proof-of-concept on Base, intended for institutional rails only, not retail.

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