JPMorgan has rolled out its deposit token JPMD on Base, bringing tokenized bank deposits back into focus. The move does not remove the walls around the banking system. Citi and Bank of New York Mellon have stayed with private blockchain setups, and JPMorgan’s token, though deployed on the public Base network, still operates in a permissioned format.
A CoinDesk Crypto for Advisors column this week, written by McDermott Will & Emery partners Laurie Rosini and Morva Rohani, set out why deposit tokens are likely to remain inside controlled environments rather than move like open-market stablecoins.
Deposit tokens and stablecoins may look alike on-chain, but they are built differently
The report says both products can appear to be blockchain-based money, yet the legal and economic structure behind them is not the same.
Stablecoins function more like bearer-style instruments. The issuer’s liability continues as the token moves, and a fresh customer relationship does not need to be formed every time the token changes hands. In the United States, the GENIUS Act would impose Bank Secrecy Act and anti-money laundering obligations on permitted issuers, but the product still rests on a structure backed by at least 1:1 reserves of specified liquid assets.
Bank deposits work differently. A deposit is not fully secured by a ring-fenced pool of cash or government bonds. It is a claim on the bank itself, and banks operate with loans, securities, cash, and other assets under prudential supervision. That means a deposit token reflects an ongoing relationship with a specific bank rather than a standalone full-reserve instrument that can circulate independently. Transfer rules are tighter for that reason.
Why the permissioned wall stays in place
The piece points to three constraints: compliance, privacy, and institutional relationships.
Banks have little room to relax requirements under the Bank Secrecy Act, AML rules, and sanctions screening. They must know their customers, screen against sanctions lists, monitor suspicious activity, keep records, and comply with the Travel Rule. Because of that, deposit tokens cannot simply move into anonymous wallets or be passed to unknown holders outside controlled channels. Banks need to retain control over who can hold them and who can transfer them.
Privacy is another hard limit. Amounts, addresses, and transaction histories on public blockchains are visible, and blockchain analytics firms can often link pseudonymous addresses back to real institutions. Institutional clients do not want competitors tracing their fund flows, trading behavior, or business ties.
Put together, these constraints make a permissioned structure less a design preference and more a built-in feature of bank-issued deposit tokens.
On-chain transfers do not replace the underlying clearing system
For two customers at the same bank, a transfer can be handled by shifting the bank’s liability from one account holder to the other. No interbank clearing is needed. If the blockchain is the authoritative ledger, there is no second offline transfer system. If it is only a mirror of the bank’s core ledger, then the two records still have to stay synchronized.
Once a payment crosses from one bank balance sheet to another, the old infrastructure remains in place. Domestic U.S. dollar transfers can still move through Fedwire as reserves are transferred between banks. Cross-border payments still rely on correspondent accounts. Putting the customer-facing payment layer on-chain does not remove the settlement rails underneath it.
Banks can enlarge the garden without opening it to everyone
The article says consortium arrangements can make these closed networks larger. Participating banks can agree on customer eligibility standards and compliance requirements, accept each other’s deposit tokens, and establish net settlement rules. Interoperability protocols can also connect different permissioned networks.
That still would not turn any of them into permissionless systems. The practical reason is that tokenized Treasuries, money market funds, and other financial assets are moving onto programmable ledgers at a faster pace. Banks do not necessarily need their own deposits to circulate freely in DeFi. They need commercial bank money that can interact with those assets and with other regulated financial institutions on compatible infrastructure.
Stablecoins still have room, and a two-track model may emerge
Deposit tokens are expected to circulate only among customers of the issuing bank. That leaves several use cases outside their natural scope: remittances, corporate payments in markets with limited correspondent banking coverage, fintech firms without bank access, and tokenized markets that need to run around the clock.
In those settings, stablecoins remain the settlement asset that does not require a customer relationship at every step. The likely result, the report argues, is a parallel structure in which permissioned bank money handles institutional settlement while stablecoins serve open networks and retail activity.
The key issue is the handoff point between the two. How they connect, what that connection costs, and who carries the compliance burden remain open questions. For now, the transition still depends on traditional fiat bank transfers, which helps explain why central banks are testing tokenized settlement themselves.
Canada is moving first on stablecoins, while deposit token rules are less settled
Canada has placed the two products on separate regulatory tracks. Stablecoins have a dedicated federal framework, and the Stablecoin Act has already passed, with implementing rules still being drafted. The goal is to bring both domestic and foreign stablecoins operating in Canada under Canadian supervision.
Deposit tokens are at an earlier stage. Because they are still deposits in substance, they remain under existing banking law. The article identifies three unresolved issues: whether deposit insurance covers tokenized claims, how those tokens can move between institutions, and how bank-issued tokens should interface with stablecoin rules.
The federal government said in its Spring 2026 Economic Update that it would discuss those issues with regulated financial institutions. The article says detailed rules for the stablecoin bill could appear in the Canada Gazette this fall, while the timeline for deposit tokens remains less clear.
What JPMD signals for the market
Placed in the broader context of real-world asset tokenization, JPMD marks a practical step rather than a symbolic one. By choosing Base, JPMorgan is showing a public-chain-plus-permissioned-identity model: the public blockchain provides settlement and programmability, while identity and compliance stay under bank control.
The article highlights several points to watch next:
- Whether JPMD can move beyond JPMorgan’s existing client base and include other institutions under clearly defined identity rules
- Whether the compliance cost gap between stablecoins and deposit tokens widens as the U.S. GENIUS Act and Canada’s Stablecoin Act rules take shape
- Whether advances in privacy transaction technology could make a public-chain-plus-permissioned model a more common structure
- How quickly central bank work on tokenized settlement lowers the cost of the handoff point and helps one system build network effects first
The article’s conclusion is that deposit tokens are not swallowing stablecoins. They are drawing a boundary. Where bank money stops, stablecoins may take over. For investors holding tokenized products, the central question remains simple: in which system does the final settlement actually happen?