JPMorgan Chase is expanding its blockchain ventures by piloting its new deposit token, JPMD, on the Base network—Coinbase’s Ethereum layer-2 platform.
Naveen Mallela, who leads blockchain initiatives at JPMorgan’s Kinexys division, confirmed to Bloomberg that a test batch of JPMD tokens will soon be transferred to Coinbase. The transaction will occur on Base, which, since its 2023 launch, has become the dominant player among Ethereum’s layer-2 networks, as per CoinGecko data.
The pilot will initially support USD transfers, with plans to include other currencies once regulatory green lights are secured. If the test is successful, JPMorgan expects Coinbase’s institutional users to gain access to JPMD for transactions in the coming months.
Deposit Tokens Offer Institutional Advantages
This pilot follows JPMorgan’s recent trademark filing for JPMD, which hints at a broader vision involving digital asset transfers, trading, and payments within the banking ecosystem.
Unlike stablecoins—which are usually backed by cash and equivalents and operate outside of traditional banks—deposit tokens are digital versions of actual bank deposits. They live entirely within the regulated banking framework.
“Deposit tokens offer clear advantages over stablecoins from an institutional perspective,” Mallela told Bloomberg. He explained that because deposit tokens operate under a fractional reserve model, they can scale more efficiently.
Mallela also hinted at the possibility of JPMD eventually offering interest payments—an edge over most stablecoins, which typically do not yield returns.
Still, the broader crypto industry is seeing growing interest in yield-bearing stablecoins. Some insiders suggest that U.S. banking giants are increasingly anxious about their disruptive potential. Austin Campbell, a finance professor at NYU, said some banking leaders worry these new crypto products could pose serious challenges to traditional financial structures.
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