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J.P. Morgan Bank is planning to develop and launch a blockchain based payments system.

The J.P. Morgan cross-border payments system will enable banks and other financial institutions to transfer money using digital deposit tokens.

The JPM Coin enables its customers to transfer funds between its branches which exist in different countries.

J.P. Morgan's blockchain based payment system is faster, cheaper and more secure than the traditional financial system.

Keywords: Blockchain based deposit token, Blockchain based payments, blockchain and token deposits, cross-border payments, JP Morgan Chase & Co. JPMorgan crypto investments, JP Morgan blockchain, blockchain developer
## Introduction 
Blockchain technology has improved how people send and receive money around the world. As a result, many financial institutions are devising new ways of making international transfer of funds more secure, faster and cost-effective. Today, we discuss howJ.P. Morgan is using blockchain technology to improve its money transfer system. 
### J.P. Morgan Introduces Blockchain Powered Deposit Tokens
J.P. Morgan, a multinational and universal bank, is exploring ways of using blockchain based digital deposit tokens to facilitate seamless transfer of funds among its world-wide branches as well as other affiliated banks. Using the deposit tokens will enhance fast and cheaper cross border payments. 

According to Bloomberg, J.P. Morgan Chase & Co already has a viable infrastructure to support its proposed payments system. However, it is still waiting for a go-ahead from the necessary United States regulators. Per a reliable source, J.P. Morgan will launch the blockchain based payments system within one year of obtaining the required legal approval.

Related news: [JP Morgan Seeks Business Opportunities in the Metaverse](https://www.gate.io/blog_detail/561/jp-morgan-seeks-business-opportunities-in-the-metaverse "JP Morgan Seeks Business Opportunities in the Metaverse")
## How Does the System work? 
First off, we need to understand what a deposit token is and its role in the new world order financial system. A deposit token is a digital coin that represents a claim against a commercial bank. 

Specifically, the JPM coin will enable clients of the J.P. Morgan Bank to send and receive cash in locations where it has branches. This is because it has a compliance system that checks the validity of all transactions in real time. During the first phase its blockchain based deposit token will be denominated in the United States dollar although it will introduce more fiat currencies in the future. 

Its main advantage is that blockchain and token deposits facilitate “instantaneous transfer of payments between institutional accounts,” thereby streamlining the banking process. However, it is important to note that people will not use the deposit tokens as payment to purchase cryptocurrencies. They will not use them in the same way as stablecoins since they only function as a means of transferring financial value between parties. 

The other interesting thing is that the tokens are only used within the traditional financial system where they facilitate the transfer of fiat currencies. The reason is that the digital deposit tokens act as bank deposits. A J.P. Morgan spokesperson provided more details on how the tokens work. 

He/she said, “**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.**”

During the first stage only banks and other large financial institutions will use the tokens to make payments which reduces their costs of doing business. Again, the JP Morgan crypto investments will allow its customers to send funds to other banks as well as large financial businesses that register with the blockchain based payments system. 
## The JPM Coin 
The blockchain based deposit tokens are different from the existing JPM coins launched in 2019. The JPM coins are internal stablecoins for transferring value within its unique system. As such, various corporate organizations can move funds among J.P. Morgan Bank branches. They can use the system to transfer dollars and Euros to all locations where there are J.P. Morgan branches. Since its launch the JPM coin has facilitated the transfer of more than $300,000. 

Read also: [JP Morgan & Decentraland: A Metaverse Marriage](https://www.gate.io/blog_detail/847/jp-morgan-decentraland-a-metaverse-marriage. "JP Morgan & Decentraland: A Metaverse Marriage")
### The JPM Coin Supports the Euro
The JPM coin now supports the Euro. German Conglomerate Siemens was J.P. Morgan’s first customer to use the [JPM coin](https://www.gate.io/bitwiki/detail/736 "JPM coin") for transfering the Euro among its branches. Notably, the JPM coin is  ONYX, a J.P. Morgan’s blockchain-based platform’s coin which was launched in 2020. 
### J.P. Morgan Applies Blockchain to Interbank US dollar transactions
J.P. Morgan intends to use its blockchain based payments system for interbank US denominated transactions in India amid a growing tendency towards de-dollarization. 

Therefore, it has partnered with several Indian banks like ICICI Bank, Axis Bank, HDFC Bank, Yes Bank and IndusInd Bank to facilitate the interbank transfers using the JPM coin. This system reduces the transaction time to near-instant as well as operating 24/7. 
### JP Morgan’s Previous Experience with Blockchain and Crypto Projects 
To begin with, in 2022 the bank partnered with the Monetary Authority of Singapore to test its blockchain and token deposits system. The reason is that the bank focuses on introducing game-changing blockchain based financial transaction solutions.

 In this respect, Umar Farooq, CEO of J.P. Morgan's web3 arm Onyx, said, "J**PMorgan continues to develop blockchain-based solutions for financial services and sees deposits accessible on the public blockchain as the next step in the evolution of digitized commercial bank money.**” 
 
As already noted, the bank introduced its JPM coin in 2019 as a means of  revolutionizing the way it conducts its financial transactions. This coin is part of the bank’s conditional payments system that depends on smart contracts. Such a system is different from the traditional payments methods that separate the transaction message from the physical movement of the funds which makes reconciliations very difficult. 

Second, the bank has already developed its JP Morgan blockchain that supports the development, launch and use of the blockchain based deposit tokens. Once the United States government approves the token its blockchain developer will operationalize the entire system. 
## Benefits of the J.P. Morgan Blockchain Based Payments System
People can use the system to send money to individuals who use other banks. As well, J.P. Morgan customers can settle payments that involve other financial instruments which exist on the blockchain. Also, the system has robust anti-money laundering and anti-fraud controls. 

Nonetheless, people cannot trade the token on crypto exchanges as it is only functional within the traditional financial system. 

In a recent study, J.P. Morgan said, “We believe deposit tokens will become a widely used form of money within the digital asset ecosystem, just as commercial bank money in the form of bank deposits makes up over 90% of circulating money today.”

Comparison of J.P. Morgan’s Blockchain based Payments System and the Traditional Financial System
Of course, the major similarity between the J.P. Morgan’s Blockchain based Payments System and the Traditional Financial System is that they allow users to transfer financial values among themselves. However, they have different modes of operations and advantages as the following table indicates.

| Blockchain based Payments  | Traditional Financial Payment System  |
| ------------ | ------------ |
| The funds are transferred near-instantly, irrespective of geographical locations.  |  It often takes several days for  the money to reach its destination. |
| The system is cheaper.  | The system is more  expensive.  |
| There are no intermediaries.  | Intermediaries facilitate most transactions. |
| There is synchronous movement of transaction messages and the money.  | Oftentimes, transaction messages move faster than the money. |
| The money is more secure as transactions are stored across a network of computers.  | The transactions are stored in a single location which may increase risks.  |
| The system is transparent as transaction records exist on the blockchain.  | There is greater risk of frauds as transaction records are maintained in centralized servers. |
| They often provide limited financial products and services.  | Banks often provide more products and services. |
| Some governments do not regulate blockchain based systems which reduces consumer protection.  | There is better consumer protection since the government regulates the system. |

## Challenges which J.P. Morgan May Face
In implementing its blockchain based cross-border payments system J.P. Morgan is likely to encounter a few problems. It can face regulatory challenges from the United States and other countries who may not approve its digital deposit token. 

The second problem is a possible low adoption rate. It may take a long time for many big banks and financial institutions to adopt its cross-border payments system. 

Next, J.P. Morgan may encounter much competition from other financial institutions that may introduce their own deposit tokens in the future. 
### How the J.P. Morgan Blockchain based Payments System Affects other Banks 
The success of the J.P. Morgan Blockchain based Payments system may influence other banks and financial institutions to implement similar systems. This is because their customers may request them to develop such payment systems. 
## Conclusion 
J.P. Morgan is exploring ways to use a blockchain based payments and settlement system suitable for banks and other large financial institutions. Currently, it is using its JPM coin to facilitate the transfer of funds between its branches. Nevertheless, it is planning to launch an interbank money transfer system in India. The J.P. Morgan cross-border system has several advantages over the traditional financial system which include faster and cheaper transactions.   
## FAQs about JPMorgan
### How is J.P. Morgan using blockchain?  
J.P. Morgan is using the blockchain to facilitate cross-border payments and other financial settlements. It uses the JPM coin to enable its users to send and receive funds. Also, it is planning to develop a blockchain based deposit token that facilitates the transfer of financial value among different banks and large institutions.  
### What is ONYX by JPMorgan?
ONYX  is JPMorgan’s blockchain-based platform that enables people to transfer funds using its JPM coin. Currently, the JPM coin supports the transfer of cash using the Euro. Nevertheless, it is planning to add the United States dollar to its payment system. 


<div class="blog-details-info">
<div>Author:** Mashell C.**, Gate.io Researcher
<div class="info-tips">\*This article represents only the views of the researcher and does not constitute any investment suggestions.
<div>\*Gate.io reserves all rights to this article. Reposting of the article will be permitted provided Gate.io is referenced. In all cases, legal action will be taken due to copyright infringement.
</div>

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J.P. Morgan, plans to develop and launch a cross-border blockchain based payments _ which is faster, cheaper and more secure than the tradfi _.

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JP Morgan Considers Blockchain Powered Deposit Tokens for Faster Transactions and Reduced Costs