"Blockchain + Finance" the most heavyweight application? Goldman Sachs plans to launch Blockchain + Payment and Settlement

According to the information obtained by the Zhītōng Finance APP, media reports citing informed sources revealed that JPMorgan Chase (JPM.US), the giant of Wall Street commercial banks, is in the early stages of exploring blockchain-based digital deposit tokens to accelerate cross-border payments and settlements. The informed sources stated that the largest bank in the United States in terms of assets has developed most of the infrastructure required to operate this new payment method. However, it will not create such tokens unless the project receives approval from US regulatory agencies. The sources said that the bank may launch this product for enterprise clients within less than a year after obtaining approval.

Deposit tokens refer to transferable digital currencies that represent claims on deposits held by commercial banks. Essentially, they are digital versions of the deposits in customer accounts. Since transactions using these digital currencies are processed on the blockchain, settlements are instant. Supporters of this new form of currency believe that it may also make transactions faster and more convenient.

A spokesperson for JPMorgan Chase stated in a statement, "Deposit tokens bring many potential benefits, but we also recognize that regulatory agencies want careful consideration and due diligence before the development and use of any new product." "If this demand develops, our blockchain infrastructure will be able to support the formal launch of deposit tokens relatively quickly." As part of the Monetary Authority of Singapore's Project Guardian, the bank piloted the issuance of deposit tokens in a single transaction last year and highlighted the enormous potential of this form of currency in a recent study.

This move will mark JPMorgan Chase's positive expansion efforts in the blockchain field. The bank has been at the forefront of Wall Street's attempts to simplify some cumbersome processes in the banking industry using encryption technology. Although the industry has conducted exploratory experiments in related fields for nearly a decade, it has not gained any significant benefits from this technology as a whole. This has led some skeptics to question the practical application efficiency of blockchain in the financial sector.

Efficiency May Surpass JPM Coin

JPMorgan Chase has already developed multiple applications using blockchain technology. Among them is a system operated by the bank called JPM Coin, which was officially announced in 2019 and allows some of JPMorgan Chase's corporate clients to transfer US dollars and euros from their various accounts within financial institutions. The bank stated in June that since the launch of the system, it has processed transactions worth approximately $300 billion using the system. However, compared to that, JPMorgan Chase's daily total value of US dollar transactions is a staggering $10 trillion.

The aforementioned sources emphasized that the functionality of deposit tokens will be completely different from that of JPM Coin, as it can be used to easily remit funds to customers of another bank. It is also well-suited for settling transactions involving tokenized securities or financial instruments issued on the blockchain. However, similar to JPM Coin, its infrastructure will be connected to the bank's existing compliance systems so that transactions can undergo customer knowledge, anti-fraud, and other necessary checks and become part of the company's regulatory reporting. According to insiders, deposit tokens may initially be denominated in US dollars, but if approved by relevant regulatory agencies, they may later be denominated in other legal currencies. They will not be used to purchase cryptocurrencies or replace stablecoins like Tether's USDT. Stablecoins are considered to have a 1:1 value with hard currency assets and are used by traders to enter and exit the cryptocurrency market or convert digital assets between different cryptocurrency exchanges. Deposit tokens, on the other hand, are intended for use in traditional financial systems, primarily for payment, settlement, and similar functions.

In a recent research report, JPMorgan Chase stated, "We believe that deposit tokens will become a widely used form of currency in the digital asset ecosystem, much like commercial bank money in the form of bank deposits represents over 90% of the circulating currency."