JPMorgan Chase has moved its digital deposit token, JPM Coin, from its internal blockchain to Coinbase’s public Ethereum-based network Base. The move comes six years after JPMorgan first introduced blockchain-based deposit accounts for institutional clients in 2019, using a permissioned version of Ethereum later branded Kinexys.

According to JPMorgan executives, the bank has witnessed ballooning client demand to conduct payments and collateral management directly on public blockchains. While the multi-national financial institution is still in control of the token’s access, processing roughly $10 trillion in payments daily would be more suitable in a public network than a private one.

As reported on Cryptopolitan, JPM Coin was launched on November 12 and successfully tested by Mastercard and Coinbase.

JPMorgan product head: Base is important for institutional customers

JPMorgan’s blockchain payments initiative began as a tightly controlled experiment. The original JPMD allowed approved institutional customers to move tokenized bank deposits internally, settling payments around the clock exclusively on Kinexys. 

The new deployment on Base is the first time JPMorgan has fully migrated the deposit token to a public blockchain environment. Basak Toprak, Product Head of Deposit Tokens at JPMorgan’s Kinexys Digital Payments unit, said the motive behind migrating to base was due to demand.

“Right now, the only cash or cash equivalent option available on public chains is stablecoins,” Toprak said in a recent interview. “There is a demand for making payments on public chains using a bank deposit product. We thought this was particularly important for institutional customers.”

Coinbase’s public blockchain has cheaper transactions than Ethereum’s main network, although it has the security capabilities of the most used DeFi network. JPMD’s arrival on Base was greeted with enthusiasm in some corners of the crypto industry, where proponents celebrated the linking of the bank’s payments coin to the US’s largest crypto exchange.

However, according to Toprak, there’s not much to celebrate because “a payment is a payment.”

“Cash is used as collateral today in traditional finance, so it can be used as collateral in the blockchain world as well. There’s nothing new about it,” she explained.

Many of the crypto-native banking firms already interact with Coinbase for trading, custody, and collateral management. That existing relationship makes Base the go-to venue for settling obligations using tokenized bank deposits, the product head of tokenized deposits said.

Is JPMD a stablecoin? 

Margin payments and collateral transfers are mostly handled through stablecoins or through traditional bank accounts off-chain, each approach having its limitations. Bank accounts have cutoff times and settlement delays, and stablecoins come with different risk considerations for institutions accustomed to regulated bank deposits.

“So that’s the use case they are looking to adopt and use: JPM Coin as a means to either keep collateral or make margin payments for transactions related to their crypto purchases, for example,” Toprak continued.

Much different from open stablecoins, JPMD is permissioned and can only be transferred between whitelisted clients that have completed JPMorgan’s onboarding process. That structure enables the bank to extend its deposit-taking business onto public infrastructure without relinquishing control over compliance or token governance.

“Deposits are obviously the dominant form of money today in the traditional world, and we think very strongly that they should have their place in the onchain world as well,” Toprak said.

She also admitted deploying on a public blockchain required years of internal preparation, but reiterated that JPMorgan worked to satisfy governance, compliance, and risk teams.

“That is the work we’ve done over the past years. We showed to our internal teams that we can do this in a very controlled way, because we are controlling the smart contract,” she added. 

Brian Foster, Coinbase’s Global Head of Wholesale, coined the term tokenized deposits the “cousin of stablecoins.” 

“I’m not here to tell you that one is better than the other; the market’s going to tell us that. I think banks need to figure out: ‘How do I export this?’ How do I get distribution for this new product outside of the four walls of my bank?” Foster reckoned.

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