JPMorgan Chase, the largest bank in the U.S., is doubling down on its bet on the crypto space by launching its own eponymous token, further blurring the lines between commercial banking and the crypto industry. 

The bank announced on Tuesday that it would be piloting the new digital currency called JPMD in the coming days, in partnership with crypto exchange Coinbase. Rather than a stablecoin, like some were expecting, JPMD will be a deposit token—a digital representation of a bank deposit that is managed with blockchain technology. The company filed a trademark for “JPMD” over the weekend. 

“This pilot combines the credibility of both JPMorgan and Base to help bring institutional money into a more global economy,” Jesse Pollack, VP of engineering at Coinbase, said in a statement. 

The token will be used to settle transfers around the clock and make cross-border business-to-business payments on Base, Naveen Mallela, global co-head of JPMorgan Chase’s blockchain division Kinexys, told Fortune. “We have always believed in having a token-based solution on public blockchains,” he said. 

The bank plans to issue JPMD on Base, a public Ethereum-based blockchain managed by Coinbase. It will be exclusively available to JPMorgan’s institutional clients, which include corporations and pension funds, according to Mallela. However, JPMorgan plans to expand the use of its JPMD token to more institutional clients over the next few months.

Deposit tokens vs. stablecoins

JPMorgan’s decision to create a deposit token instead of a stablecoin is a noteworthy break in an otherwise new corporate trend, and allows the bank to stand out in a crowded field. 

Several major companies including Meta and Google have recently expressed interest in incorporating stablecoins into their payment structures, likely because the cryptocurrency—which is backed 1:1 to the U.S. Dollar—is considered more stable than other forms of crypto like Bitcoin. 

JPMorgan chose to launch a deposit token, rather than a stablecoin, because of its different use cases, Mallela said. Stablecoins, like Tether’s USDT and Circle’s USDC, are primarily used by retail clients for crypto trading, remittances, and as a store of value, and are managed by crypto companies, he says. Deposit tokens, on the other hand, are more suitable for institutional clients because they are issued by a licensed bank, making them better integrated into existing institutional financial systems. 

“Institutional clients can treat JPMD as bank deposits on their balance sheet, providing certainty around financial and accounting treatment,” Mallela said. 

Each JPMD deposit token traded on Base will represent a deposit claim against JPMorgan. Rather than being backed 1:1 by the U.S. dollar like a stablecoin, JPMD will be backed by “the same liquidity frameworks as traditional banks,” Mallela said. 

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Coinbase, the leading crypto exchange in the U.S., is reportedly seeking regulatory approval to offer “tokenized equities” on its platform, a move that would put the company in direct competition with retail brokerages like Robinhood and Charles Schwab. 

Paul Grewal, chief legal officer at Coinbase, told Reuters that the company was seeking the go-ahead from the Security and Exchange Commission for the new product, adding that tokenized equities was a “huge priority.” 

When asked for additional comment, Coinbase confirmed the news to Fortune, and pointed to an additional social media post from Grewal, in which he wrote: “Exciting? Yes. Important? Absolutely. But breaking news? Not exactly. We’ve been saying since earlier this year that @SECGov should enable markets to unlock tokenized securities. Tokenized debt, equity, and investment funds present an opportunity for tailored regulation for securities that are offered and traded via digitally native methods.” 

Grewal followed that up with a link to a March response from Coinbase to a SEC inquiry asking for input from the public about how to regulate the crypto space. The company’s 41-page response to the SEC focused on the advancement of discussions around tokenized equities, among other things.

The SEC did not immediately respond to Fortune’s request for comment.

“Tokenized equities” refers to an investment product in which shares of a publicly-traded company are converted into a digital token that can be traded on a blockchain, as if it were a form of cryptocurrency. That would allow customers to trade these “equities” around the clock, as blockchain transactions can take place at any time of day rather than regular Wall Street trading hours. 

Tokenized equities have been a long-time goal for Coinbase. The company first tried to bring digitized stocks to market in 2021, the same year as its initial public offering, by issuing a tokenized version of its own stock, Coinbase’s chief financial officer Alesia Haas said in March of this year. She added the plan was halted by Biden-era SEC chair Gary Gensler, but that under a different presidential administration that has embraced the crypto industry, Coinbase would be renewing its push for tokenized equities. 

“I now believe that our U.S. regulators are looking for product innovation and looking to move forward,” she said. “I’m now excited that we may be able to re-engage those conversations with the SEC’s task force, that we may be able to bring forward security tokens.”

Most companies that offer securities trading have to be registered as broker-dealers, like Morgan Stanley’s E*Trade or Fidelity, which Coinbase is not. One way for Coinbase to receive approval from the SEC to offer tokenized equities is by requesting a “no action letter,” Grewal said. That would be a way for the SEC to pledge it would not object to tokenized securities, or recommend an enforcement action.   

“With a no action letter, an issuer of a tokenized equity or a platform that wishes to offer secondary trading in those equities can have some confidence, some comfort, that the SEC has adopted its view of why this product is compliant,” Grewal said. 

It is not clear whether Coinbase is seeking to gain approval for tokenized securities through a “no action letter” or through some other legal means. 

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The country’s biggest bank has applied for a trademark related to digital currency with the United States Patent and Trademark Office (USPTO). The move has led some to speculate the application for “JPMD” reflects the bank’s growing interest in stablecoins—a type of cryptocurrency that is designed to maintain a value in line with the U.S. dollar. 

The application was filed by JPMorganChase on June 15, according to the USPTO’s website. The application listed “JPMD” as a good or service that would provide “trading, exchange, transfer and payment services for digital assets,” among other categories related to cryptocurrencies and blockchain technology. 

While the bank has not confirmed its intent to launch a new cryptocurrency, some X users believe that “JPMD” is a reference to an upcoming stablecoin offering. “Stablecoin by JPMorgan is incoming,” one user wrote in a post on X. “$JPMD is the ticker.”

Another X user wrote, “The world’s biggest bank embracing stablecoin is your sign to stay ultra bullish.”

The social media posts did not offer any additional evidence about the bank’s plans, and JPMorganChase did not immediately respond to a request for comment from Fortune. 

The speculation comes amid renewed interest in stablecoins as President Donald Trump embraces the industry. A number of companies have been exploring ways to implement stablecoins, which are often used to settle cross-border transactions and to protect fiat currencies from inflation, into their payment infrastructure. 

In March, asset manager Fidelity announced that it was “actively testing” a stablecoin but had no plans to launch the product at this time. 

Last month, the Wall Street Journal reported that JPMorganChase was involved in conversations with Bank of America, Citigroup, Wells Fargo, and other commercial banks about potentially issuing a joint stablecoin, citing people familiar with the matter. 

Companies outside of the world of finance are considering stablecoins too. In May, Fortune reported that Mark Zuckerberg’s Meta was in talks with crypto firms to integrate stablecoins to manage payouts. Earlier this month, Fortune reported that in addition to Meta, Apple, X, Airbnb, and Google were all exploring the use of stablecoins. 

Whether “JPMD” is a stablecoin or some other type of cryptocurrency, it is not the bank’s first foray into the digital assets space. JPMorgan launched JPM Coin, a cryptocurrency used for the bank’s wholesale payments business, in 2019. The company announced in 2023 that JPM Coin was handling $1 billion of transactions daily. 

Until recently, JPMorgan Chase CEO Jamie Dimon has been a staunch critic of the crypto industry. In 2021, Dimon called Bitcoin, the most popular cryptocurrency, “worthless.” In 2023, he told Congress that the only true use case for crypto is for “criminals, drug traffickers…money laundering, tax avoidance.”

However, as the regulatory environment in the U.S. warms to the idea of digital assets, Dimon has changed his tune. Last month, Dimon announced that JPMorganChase would allow clients to buy Bitcoin but would not custody it.

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As the first large-scale military parade in decades made its way down the streets of Washington, DC on Saturday, organizers gave thanks to the country’s men and women in uniform—and also to various corporate sponsors, including the giant crypto exchange Coinbase. Not everyone was comfortable with the spectacle of the crypto industry—which was founded in opposition to government power—being so closely aligned with a display of force by the U.S.

Coinbase was one of a slew of corporations that sponsored the parade, according to a statement from America250, the official body organizing the events to honor the 250th anniversary of the U.S. Other corporate sponsors included data firm Palantir, aerospace giant Lockheed Martin, and household names like Walmart, Coca-Cola and Chrysler. 

Kara Calvert, Coinbase’s vice president of U.S. policy, represented the company at the parade. 

“It was an absolute personal honor to attend the 250th celebration of the @USArmy with my son and mom,” Calvert said in a post on X. “I was also honored to represent @coinbase at the event, a proud sponsor of @America250.”

While some saw the sponsorship as a way to bring awareness to crypto, others saw it as a major break from the industry’s ethos as a financial system independent from a centralized entity.

“What Coinbase did by sponsoring this army parade feels like an insult to everything our industry stands for,” one user wrote on X. “Crypto emerged from ideals of decentralization, individual sovereignty, and freedom from oppressive state control.” 

Adam Cochran, managing partner at blockchain venture capital firm Cinneamhain Ventures, said that as a result of the sponsorship, he would sell his shares in the company and withdraw his crypto assets from the platform, in a post on X. 

Cochran pointed out that the sponsorship went against Coinbase’s policy on political causes. “We don’t advocate for any particular causes or candidates internally that are unrelated to our mission, because it is a distraction from our mission,” the company says on its website.

“Sponsoring a military parade, in a divided country, with already split views of crypto isn’t true to this policy,” Cochran said. “It’s just bad marketing that hurts this industry’s adoption.”

It is unclear how much money Coinbase spent on the sponsorship or if any top-level executives, like CEO Brian Armstrong, were in attendance. A spokesperson for Coinbase declined to comment when contacted by Fortune.

However, some people argued that the military is an apolitical institution and therefore, Coinbase’s sponsorship of the event is not an endorsement of any political party. 

“$COIN supporting our military in no way implicates their political affiliation,” one user wrote in response to Cochran’s post. “Military should always be apolitical for the good of the nation.”

Despite the criticism, Coinbase shares are up 5% since the market opened on Monday, growing from $248 to $256.

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