JPMorgan Prefers Deposit Tokens To Stablecoins For Commercial Bank Blockchains

Key Points:JPMorgan Chase consultants Oliver Wyman studied the use of Blockchain technology in commercial banking.
This contrasts with stablecoins and CBDCs, which are often produced by non-bank private entities.
JPMorgan Chase revealed its internal JPM Coin as well as the Onyx blockchain platform. It has tested many of the applications of the technology, including cross-border trades and repurchase agreement trades.
JPMorgan Chase and Oliver Wyman, consultants, examined the use blockchain technology in commercial banking in a paper published on February 9. Stablecoins and CBDCs (central bank digital currencies) have dominated the market in the past. However, the authors emphasize the benefits deposit coins bring in terms stability and dependability. A depository institution issues tokens on a blockchain to reflect a deposit claim. This is in contrast to CBDCs and other stablecoins which are often produced by non-bank private entities. This distinction in the issuer is an important benefit:
“Deposit tokens are commercial bank currency embodied in a new form. They can be considered part of the banking ecosystem and are subject to regulation and supervision that is applicable to commercial banks.”
The authors of the paper emphasize that regulation increases trust, lowers the possibility of a run on deposit tokens, and ensures dependability.Stablecoins don’t compare well in this aspect because there aren’t any requirements for reserves and there’s confusion about redemption rights. Although deposit coins can be expected to withstand this stress, they are “extensions to traditional deposits” and could become infected if there is a run on a stabilizecoin.
“Historical analysis shows that traditional deposits have been a reliable source of financing for commercial banks through all economic cycles.
JPMorgan Chase’s internal JPM Coin and Onyx blockchain platform were unveiled in 2020. It has tested many applications of the technology, such as cross-border trades, repurchase agreement trades, and collateral settlement.DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your research before investing.Join us to keep track of news: coincu.comAnnieCoincu NewsTags: BlockchainCommercial Bank BlockchainsJPMorganStablecoin