JPMorgan Chase is researching a digital deposit token to make settlements and cross-border payments faster.
According to Bloomberg, the banking giant has the essential infrastructure needed to accept this new form of payment, however, the token will not be created if it doesn’t get the green light from U.S. regulators.
If approved, JPMorgan Chase plans to launch the digital deposit token for corporate client use within a year’s time. It will facilitate money transfers to clients of other banks and streamline cross-border transactions. Initially, the digital deposit token may only support dollars, but could potentially support other fiat currencies down the line.
“Deposit tokens bring plenty of potential benefits, but we also appreciate that regulators would want to be thoughtful and diligent before any new product gets developed and used. Should that appetite develop, our blockchain infrastructure would be able to support the launch of deposit tokens relatively quickly,” a JPMorgan spokesperson said in a prepared statement to Bloomberg.
Banks Are Inching Closer Towards Blockchain Adoption
Banks have generally tiptoed around adopting cryptocurrencies, but they have not been hesitant to explore its related technology, especially in the field of blockchains. Chase’s CEO Jamie Dimon has certainly expressed his misgivings about Bitcoin, calling it unreliable and fraudulent back in 2017.
Still, innovations in cryptocurrency and other emerging technologies are forcing banks to explore new ways to make payments faster, cheaper, and safer. As financial institutions delve into this new landscape, they must do so under strict compliance to current regulations, ensuring they‘re keeping user security at the forefront.
As banks turn to blockchain technology, they will create new opportunities, including extending their offerings, establishing new streams of income, and enhancing the customer service experience.
As cryptocurrency adoption continues to grow, the industry would have reached a level of maturity where financial institutions could potentially adopt as part of their offerings, in time.