Basak Toprak reveals how JPMorgan is quietly redefining Wall Street with tokenized deposits

When a financial giant like JPMorgan begins to operate openly on public blockchains, something significant is happening behind the scenes on Wall Street. The bank’s recent foray into the decentralized ecosystem, through the introduction of JPM Coin (JPMD) on the Base blockchain, does not simply represent a casual adoption of crypto technology. According to Basak Toprak, head of tokenized deposits product in JPMorgan’s Kinexys Digital Payments division, this shift is the result of a growing demand from institutional clients seeking new ways to settle values and maintain collateral in decentralized environments.

The transition from an internally developed private infrastructure to a public network like Base marks a turning point in how financial institutions view the future of digital money. Just a few years ago, the idea of a systemically important bank integrating its payment systems with a public blockchain was considered almost unthinkable. Today, this reality challenges old assumptions about the separation between traditional finance and the crypto economy.

Why institutional clients demand tokenized deposits on the blockchain

The logic behind this change is simpler than it may seem at first glance: client demand. JPMorgan was not seeking promotion in the crypto universe when it decided to bring its tokenized deposits to Base. It was, in fact, a direct response to requests from crypto companies, asset managers, and brokerages that were increasingly operating in on-chain environments.

“Currently, the only cash or cash equivalent options available on public blockchains are stablecoins,” as Basak Toprak points out in her reasoning about why the bank decided to say yes to this movement. “There is a clear demand to make payments on public networks using a genuine bank deposit product. We believe this is especially critical for institutional clients.”

Use cases are concrete: asset managers holding collateral on trading platforms, operators needing to make margin payments, and crypto companies seeking liquidity without the risks associated with traditional stablecoins. The problem with current solutions is twofold. Traditional off-chain bank accounts face limitations of business hours and operational inefficiencies. Stablecoins, on the other hand, present a different risk profile — especially concerning for institutions just starting their crypto journey and preferring the inherent security of bank deposits.

From private chain to Base: how JPMorgan is navigating the transition

JPMorgan’s blockchain story began in 2019 when the bank started offering blockchain deposit accounts to institutional clients through a permissioned version of Ethereum, originally called Onyx and later renamed Kinexys. This solution was suitable during its early stages but revealed limitations as demand evolved.

The recent adoption of Base, Coinbase’s Layer 2 solution built on Ethereum, marks a fundamental strategic shift. It is not a decision taken lightly but the result of careful assessment of where their clients are and where the market is heading.

The permissioned nature of JPMD remains a crucial aspect. The token can only be transferred between authorized parties — that is, exclusively among clients who have been onboarded to JPMorgan’s platform. This does not diminish its value or utility for participants; in fact, it offers a level of control and compliance that is particularly appealing to traditional financial institutions migrating suddenly to the on-chain space.

Tokenized deposits versus stablecoins: what will be the future of on-chain money

While tokenized deposits gained momentum, an inevitable question arises: how do they fundamentally differ from the already proliferating stablecoins? The answer lies in important details with significant implications.

Unlike traditional stablecoins, JPMorgan’s tokenized deposits are direct claims on funds actually held in bank accounts. Better yet, they can generate interest income — a feature that regulated stablecoins under the GENIUS Law are not permitted to offer directly. This characteristic fundamentally changes the value proposition, especially for institutional investors seeking to hold certain amounts without completely sacrificing the potential for returns.

The relationship between both categories is more one of complementarity than direct competition, although there are areas of overlap. Both serve similar functions in payments, settlement, and collateral in decentralized platforms. Brian Foster, Coinbase’s global head of wholesale, describes tokenized deposits as “cousins of stablecoins” — close, but distinct in origin and operational characteristics.

However, there is a significant challenge Foster identifies: interoperability. “How does a bank export a product that is essentially fixed within its own structures? How does it reach distribution outside its four walls?” This question defines the true test of long-term viability. The ease of creating and using a new product within a bank’s own ecosystem is one thing; ensuring adoption and utility outside that perimeter is entirely another.

How a systemically important bank manages risks on a public blockchain

Perhaps the most pertinent question is how an institution of JPMorgan’s size and systemic importance has become comfortable operating on a public blockchain — especially considering the repeated warnings from the Bank for International Settlements (BIS) about the inherent risks of the open crypto universe.

Basak Toprak addresses this concern clearly. Years of internal work have been done to establish the necessary trust. “Everything we implement and launch goes through our rigorous internal governance, which assesses all risk aspects related to any new product,” she explains. Control is the key factor: JPMorgan directly controls the smart contract. No one else does. Private keys are stored following best practices. There is appropriate functional separation. Crucially, the bank is the only entity that can move tokens from one address to another.

This approach transforms the risk from an unknown variable into a set of manageable, controlled risks. Public blockchains, after years of operation, have demonstrated sufficient stability and security to support this type of institutional application. It is not fundamentally different from implementing any other technological layer for a business application — it’s just that the layer in question is decentralized and transparent, features that paradoxically offer their own security mechanisms.

The future is where the clients will be

As more accounts migrate to the on-chain environment, JPMorgan will continue to observe these requests from its clients. Currently, the main interested parties are crypto companies and participants in the digital asset ecosystem. But this composition may change. Foster offers a useful perspective on the spectrum of possibilities: from fully custodial and segmented solutions (an excellent starting point) to intermediate options that still allow access to DeFi, and eventually more decentralized and fully on-chain tools.

Each bank, each institution, will need to discover where it is comfortably positioned along this continuum. For JPMorgan, the current move to Base and tokenized deposits represents a cautious but decisive step toward the future. It is not an assertion that DeFi will replace traditional finance tomorrow. Instead, it is an acknowledgment that the future will likely be hybrid — and banks that understand how to operate effectively in both worlds simultaneously will be better positioned to thrive.