JPMorgan’s Ethereum move could open tokenization to smaller banks, Brickken CEO says

JPMorgan Chase’s tokenized US dollar deposit, JPM Coin, is going live on Ethereum after first launching on Base, the Coinbase-backed layer 2 network, nearly a year ago.

The expansion challenges the idea that banks must use private blockchains to meet compliance requirements, according to Edwin Mata, CEO and co-founder of Brickken.

Commenting on the move, he said compliance depends on how blockchain technology is implemented and that public networks could give banks greater opportunities to integrate with lending platforms, collateral management systems and other financial services.

“I expect this will encourage more institutions to explore tokenization as a way to improve liquidity, expand access to financial services and make capital circulate more efficiently,” Mata said in a Monday note.

“The great winner here is actually the small banks. Major institutions like JPMorgan have spent years investing in research, development and testing, but that work has helped make tokenisation technology far more accessible and affordable for everyone else. We’re seeing implementation costs fall significantly, with some providers even offering models that reduce upfront fees, allowing smaller institutions to experiment without the enormous investment that was once required,” the CEO stated.

Mata said stablecoins have played a role in pushing banks to innovate, but he expects the benefits of tokenization to spread across the financial sector, including smaller banks and businesses. Brickken’s experience, he added, shows that access to this infrastructure is no longer limited to the largest institutions.

Issued through Kinexys, JPMorgan’s blockchain unit, JPM Coin represents a US dollar deposit held at the bank and is redeemable at a one-to-one rate.

The stablecoin-like token allows clients to transfer funds outside standard banking hours, settle trades and tokenized-asset transactions, post collateral and use programmable payment functions through smart-contract-enabled blockchain infrastructure.

JPMorgan has evaluated launching a standalone public stablecoin but has not committed to issuing one, with the bank citing customer demand and regulatory developments as factors in any future decision.