Original author: Tiger Research
Original translation: AididiaoJP, Foresight News
Key points
JPMorgan Chase begins issuing deposit tokens on the public blockchain, overlaying blockchain technology on the existing financial order
Circle applies for a trust bank license, trying to build a new financial order based on technology
The two types of institutions are attacking traditional finance from different directions, forming a two-way convergence trend
The ambiguity of value positioning may weaken the competitive advantages of each party. It is necessary to clarify the core advantages and find a balance.
New competitive landscape for on-chain financial infrastructure
Blockchain technology is reshaping the basic architecture of global financial infrastructure. According to the latest report from the Bank for International Settlements (BIS), as of the second quarter of 2025, the scale of global on-chain financial assets has exceeded 4.8 trillion US dollars, with an annual growth rate of more than 65%. In this wave of change, traditional financial institutions and crypto-native companies have shown completely different development paths:
Traditional financial institution representative JPMorgan Chase
Adopting the gradual reform strategy of blockchain +, the distributed ledger technology is embedded in the existing financial system. Its blockchain department Onyx has served more than 280 institutional clients, with an annual transaction volume of 600 billion US dollars. The latest JPM Coin has an average daily settlement volume of over 12 billion US dollars.
Circle, a representative of crypto-native enterprises
Through the USDC stablecoin, a financial network based entirely on blockchain has been built. Currently, the circulation of USDC has reached 54 billion US dollars, supporting 16 mainstream public chains, and the average daily transaction volume exceeds 3 million times.
Compared to the fintech revolution of the 2010s, current competition presents three significant differences:
The focus of competition shifts from user experience to infrastructure reconstruction
The technical depth sinks from the application layer to the protocol layer
Participants move from complementary relationships to direct competition
JPMorgan Chase: Technological innovation within the framework of traditional financial system
JPMorgan Chase has applied for a trademark for its deposit token JPMD
In June 2025, JPMorgan Chases blockchain division Kinexys began trialing the deposit token JPMD on the public chain Base. Previously, JPMorgan Chase mainly applied blockchain technology through private chains, but this time it directly issued assets on the open network and supported circulation, marking that traditional financial institutions have begun to operate financial services directly on the public chain.
JPMD combines the characteristics of digital assets with traditional deposit functions. When a customer deposits US dollars, the bank records the deposit on the balance sheet and issues an equal amount of JPMD on the public chain. The token can circulate freely while retaining the legal claim to bank deposits. Holders can exchange US dollars at a 1:1 ratio and may enjoy deposit insurance and interest income. The profits of existing stablecoins are concentrated on the issuer, while JPMD forms a differentiated advantage by giving users substantial financial rights.
These features provide asset management institutions and investors with very attractive practical value, and even some legal risks can be ignored. For example, if the on-chain assets such as BlackRocks BUIDL fund use JPMD as a redemption payment tool, redemption can be achieved 24 hours a day. Compared with the existing stablecoins that need to be exchanged for legal currency separately, JPMD supports instant cash conversion, while providing deposit protection and interest income opportunities, and has significant potential in the on-chain asset management ecosystem.
JPMorgan Chase launched deposit tokens to cope with the new capital flow and income structure formed by stablecoins. Tethers annual revenue is about 13 billion US dollars, and Circle also creates considerable income by managing safe assets such as government bonds. Although these models are different from the traditional deposit-loan spread, their mechanism of generating income based on customer funds is similar to some bank functions.
JPMD also has limitations: its design strictly follows the existing financial regulatory framework, making it difficult to achieve complete decentralization and openness of the blockchain, and it is currently only available to institutional clients. However, JPMD represents a pragmatic strategy for traditional financial institutions to enter public chain financial services while maintaining existing stability and compliance requirements, and is regarded as a representative case of the expansion and connection between traditional finance and the on-chain ecosystem.
Circle: Blockchain-native financial reconstruction
Circle has established a key position in on-chain finance through the stablecoin USDC. USDC is pegged to the US dollar at a 1:1 ratio, with reserves in cash and short-term US Treasury bonds. With its technical advantages such as low fees and instant settlement, it has become a practical alternative for corporate payment settlement and cross-border remittances. USDC supports 24-hour real-time transfers without the complex processes of the SWIFT network, helping companies break through the limitations of traditional financial infrastructure.
However, Circles existing business structure faces multiple constraints: BNY Mellon holds USDC reserves, and BlackRock manages asset operations. This structure entrusts core functions to external institutions. Although Circle obtains interest income, it has limited actual control over assets, and its current profit model is highly dependent on a high interest rate environment. Circle needs more independent infrastructure and operational authority, which is a necessary condition for long-term sustainability and revenue diversification.
Source: Circle
In June 2025, Circle applied to the U.S. Office of the Comptroller of the Currency (OCC) for a national trust bank license. This strategic decision goes beyond the need for simple compliance. The industry interprets it as Circles transformation from a stablecoin issuer to an institutional financial entity. The trust bank identity will enable Circle to directly manage the custody and operation of reserves, which will not only strengthen the internal control capabilities of financial infrastructure, but also create conditions for expanding the scope of business. Circle will lay the foundation for institutional digital asset custody services.
As a crypto-native company, Circle has adjusted its strategy to establish a sustainable operating system within the institutional framework. This transformation requires accepting the rules and roles of the existing financial system, at the cost of reduced flexibility and increased regulatory burden. The specific permissions obtained in the future will depend on policy changes and regulatory interpretations, but this attempt has become an important milestone to measure the extent to which the on-chain financial structure is established within the existing institutional framework.
Who will dominate on-chain finance?
From traditional financial institutions such as JPMorgan Chase to crypto-native companies such as Circle, participants from different backgrounds are actively laying out the on-chain financial ecosystem. This reminds people of the competitive landscape of the fintech industry in the past: technology companies entered the financial industry by implementing core financial functions such as payment and remittance internally, while financial institutions expanded users and improved operational efficiency through digital transformation.
The key is that this competition breaks the boundaries between the two parties. Similar phenomena are emerging in the current on-chain financial field: Circle directly performs core functions such as reserve management by applying for a trust bank license, while JPMorgan Chase issues deposit tokens on the public chain and expands on-chain asset management business. Starting from different starting points, the two parties gradually absorb each others strategies and fields, and each seeks a new balance point.
This trend brings new opportunities but also contains risks. If traditional financial institutions forcibly imitate the flexibility of technology companies, they may conflict with the existing risk control system. When Deutsche Bank implemented the digital first strategy, it suffered billions of dollars in losses due to collisions with legacy systems. On the contrary, if crypto-native companies over-expand institutional acceptance, they may lose the flexibility to support their competitiveness.
The success or failure of on-chain financial competition ultimately depends on a clear understanding of one’s own foundation and advantages. Enterprises must achieve an organic integration between technology and systems based on their “unfair advantages”. This balance ability will determine who will be the ultimate winner.
