JPMorgan is migrating JPM Coin from its private blockchain to coinbase
Six years after launching its own private blockchain, JPMorgan Chase is radically changing its strategy. The bank just moved its digital depository token, JPM Coin, to Base, Coinbase’s public network. A major turning point for an institution that until then had relied solely on its closed Kinexys ecosystem.
In short
- JPMorgan migrated its JPM Coin from its private Kinexys blockchain to Base, Coinbase’s public network built on Ethereum.
- The move responds to strong demand from institutional clients who want to make payments and manage their collateral directly on public blockchains.
- JPMMD remains subject to authorization and can only be transferred between clients approved by JPMorgan.
Why is JPMorgan abandoning its private blockchain?
JPMorgan launched its tokenized deposit project in 2019 on Kinexys, a private version of Ethereum. For a period of six years, only approved institutional clients could use this closed system for the internal transfer of funds. Transaction settlement occurred without interruption, but remained limited to a controlled ecosystem.
Today the situation is changing. Basak Toprak, product manager for escrow tokens at Kinexys Digital Payments, puts it simply: “ Stablecoins are currently the only payment option available on public blockchains. Our institutional clients want to make payments through a bank deposit product. »
Therefore, customer pressure pushed the bank to leave its comfort zone.
Choosing a base is not trivial. Developed by Coinbase, this blockchain offers transaction fees significantly lower than those of Ethereum while benefiting from its recognized security. For JPMorgan, which processes $10 trillion a day, the equation is clear: the public network becomes preferable to private infrastructure.
Mastercard and Coinbase have already successfully tested JPM Coin on Base since its launch on November 12th. This cross-validation shows that technical integration is working and that major players in the financial sector are ready to get on board.
New field for guarantee and margin payments
JPMMD opens concrete perspectives for market operations. Customers can now use their tokenized bank deposits as collateral or for margin payments when buying cryptocurrencies.
Toprak insists on the naturalness of this development:
Cash already serves as collateral in traditional finance. So it can also serve as a guarantee in the blockchain world.
This approach fills the void. Currently, blockchain transactions require either stablecoins or traditional off-chain bank transfers. Both options have their limits. Traditional bank accounts have opening hours and payment deadlines. Stablecoins present various risks to institutions used for regulated deposits.
JPMMD is being built as a third way. Unlike open stablecoins like USDC or USDT, this token remains under strict bank control. It can only be transferred by clients who have completed the registration process with JPMorgan. This structure allows the bank to expand its activities on public infrastructure without abandoning its governance or compliance.
Brian Foster, global head of wholesale at Coinbase, calls these “tokenized deposits” “stablecoin cousins.” He refuses to decide on the superiority of one model or the other: ” The market will tell us. Banks must ask themselves how to export this product outside their walls. »
JPMorgan has just reached a major milestone in the history of bank tokenization. By migrating to Base, the bank realizes that the future of finance lies in public blockchains. Whether other banking giants will follow this path, or whether JPMorgan will maintain its lead in this race for innovation, remains to be seen.
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I am passionate about Bitcoin, I love exploring the intricacies of blockchain and cryptocurrency and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
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The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.