JPMorgan, SEC meet to discuss capital markets moving onchain

Executives with America’s biggest bank met with the Securities and Exchange Commission’s Crypto Task Force to discuss digital asset regulation and potential ramifications of capital markets moving onchain.

The JPMorgan Chase executives discussed with the SEC the “potential impact of existing capital markets activity migrating to public blockchain” — including which areas of the existing model might change and how firms could assess the risks and benefits of those changes, according to an SEC  note  shared on Tuesday.

The two groups also discussed JPMorgan’s existing “business footprint” in the crypto space, including its current digital platform that handles repurchase agreements — a type of short-term borrowing in financial markets that falls under its “Digital Financing” and “Digital Debt Services” offerings.

JPMorgan also assessed where it could carve out a “competitive angle” — to stay ahead of the race as financial institutions look to the blockchain for faster, cheaper transactions while also unlocking new revenue streams through tokenized assets.

  Agenda in the digital asset discussion held between JPMorgan and the SEC Crypto Task Force. Source: SEC

Three JPMorgan executives meet with SEC

Scott Lucas, Justin Cohen and Aaron Iovine were the three JPMorgan executives who spoke with the SEC’s crypto group.

Lucas is the firm’s head of markets for digital assets, while Cohen is the global head of equity derivatives development; both are managing directors at the firm.

Iovine is an executive director and JPMorgan’s global head of digital asset regulatory policy.

JPMorgan pilots JPMD deposit tokens

JPMorgan’s meeting with the SEC comes as the firm announced a  token deposit pilot program  on Tuesday, with the bank launching a deposit token, JPMD, on Coinbase’s  blockchain  Base.

Coinbase’s institutional clients can use JPMD for transactions once the pilot is completed, which is expected to span over several months.

  Base launched in August 2023 and is now the largest layer 2 blockchain by total value locked. Source: DefiLlama

A day earlier, JPMorgan  filed a trademark application  for JPMD — which outlined a range of crypto-related services, including digital asset trading, transfers and payment processing.

JPMorgan exec says no plans yet for stablecoin

The JPMD trademark sparked speculation that JPMorgan would issue a stablecoin with other big banks — however, Naveen Mallela, an executive at JPMorgan’s blockchain division, Kinexys,  told  Bloomberg that token deposits are a “superior alternative to stablecoins” for institutions, noting that their fractional reserve backing makes them more scalable.

Deposit tokens represent dollar deposits held in customer bank accounts and operate within the  traditional banking framework  more so than stablecoins, which are merely digital representations of fiat currencies backed by cash and cash equivalents.