JPMorgan Discusses On-Chain Capital Markets Future with SEC Crypto Task Force
A trio of executives from JPMorgan Chase held a meeting Tuesday with the U.S. Securities and Exchange Commission’s (SEC) Crypto Task Force to delve into the regulation of digital assets and potential ramifications should key capital markets activities migrate to public blockchains, according to an SEC note shared publicly.
The discussion centered on the “potential impact of existing capital markets activity migrating to public blockchain,” exploring areas of internal model changes and firm-level risk and benefit assessments should such a shift occur. According to the SEC, the dialogue also covered JPMorgan’s “business footprint” in the digital asset space.
SEC note shared on Tuesday details the meeting agenda.
Executives Meet with SEC
The meeting involved JPMorgan executives Scott Lucas (Head of Markets, Digital Assets), managing director Justin Cohen (Global Head of Equity Derivatives Development), and executive director Aaron Iovine (Global Head of Digital Asset Regulatory Policy).
JPMorgan Pilots JPMD Deposit Tokens
The regulatory meeting follows JPMorgan’s announcement of a token deposit pilot program on Tuesday. The bank is launching a deposit token, designated JPMD, on Coinbase’s Base layer-2 Ethereum blockchain.
Base is a leading layer-2 blockchain currently hosting the JPMD deposit token pilot.
The pilot, expected to span several months, will initially enable Coinbase’s institutional clients to utilize JPMD for transactions. Relatedly, JPMorgan secured approval for the JPMD trademark, outlining services including digital asset trading and payment processing.
No Immediate Stablecoin Plans
Speculation that this development might signal a stablecoin joint venture among large banks was countered by Naveen Mallela, an executive at JPMorgan’s Kinexys blockchain division. Mallela, speaking to Bloomberg, stated deposit tokens are a “superior alternative” to stablecoins due to their use of fractional reserves, enhancing scalability for financial institutions.
JPMD tokens represent dollar deposits held securely within linked customer bank accounts, functioning within familiar banking structures unlike stablecoins, which are essentially digital dollar representations backed by cash equivalents.
