Deposit tokens and stablecoins seen through JPM Coin, and the questions left in Korea

Efforts to exchange bank deposits as tokens on blockchains are continuing in Korea and abroad. In Korea there is Project Hangang, a pilot in which banks issue deposit tokens on a network built by the Bank of Korea and members of the public try them out for payments. In March 2026 the Bank of Korea announced the project's second phase and said that nine banks are expected to take part. In the United States, J.P. Morgan announced on October 19, 2026 that its U.S. dollar deposit token, JPM Coin, can now also be used on Ethereum (a public blockchain that anyone can join). Both cases involve deposit tokens.

In short: a deposit token represents a deposit in a bank account as a token on a blockchain. Under the GENIUS Act, the U.S. stablecoin law, a payment stablecoin is a token whose issuer holds reserve assets (assets set aside to cover repayment) separately. The Act excluded deposits recorded on a blockchain from the definition of a stablecoin. J.P. Morgan describes JPM Coin as a deposit token, not a stablecoin. In Korea, the Enforcement Decree of the Act on the Protection of Virtual Asset Users states directly that deposits handled by banks and others through the Bank of Korea network are excluded from virtual assets. How to distinguish other deposit tokens, beyond what the decree names directly, from won-denominated stablecoins is still an open question. Depending on which way this is decided, the tokens to which rules on reserve assets, redemption and interest apply could differ.

JPM Coin as J.P. Morgan describes it

In its product information, J.P. Morgan defines JPM Coin as "a bank-issued deposit token" and states that it is "not a cryptocurrency or a stablecoin." Institutional clients convert U.S. dollars in their J.P. Morgan accounts into JPM Coin and send and receive it on the blockchain. They can convert it back into dollars in their accounts at any time. According to J.P. Morgan, funds stay within J.P. Morgan's banking infrastructure at every stage.

Although the blockchain is public, the parties that exchange the tokens are limited: they are vetted J.P. Morgan institutional clients. J.P. Morgan says JPM Coin carries the same credit risk (the risk that the bank holding the money cannot pay it back) as an ordinary bank deposit. It adds that JPM Coin also benefits from existing regulatory frameworks for deposits.

The line drawn by the U.S. GENIUS Act

The GENIUS Act, enacted in July 2025, defines a payment stablecoin as a digital asset designed to be used as a means of payment or settlement. Its issuer must be obligated to convert, redeem or repurchase it for a fixed amount of money, and must represent that it will keep its value stable. Deposits are excluded from this definition. The provision also specifically excludes deposits recorded on a distributed ledger such as a blockchain (a ledger shared among many participants).

The GENIUS Act places obligations on stablecoin issuers. They must hold separate reserve assets at least equal to the tokens they have issued, and they may not pay holders interest or yield simply for holding the tokens. Because deposits recorded on a blockchain are excluded from the definition, these obligations are not directed at deposit tokens.

That does not mean a token is a deposit token if a bank issues it and a stablecoin if another company does. The GENIUS Act allows insured depository institutions, such as banks, to issue stablecoins through approved subsidiaries. What separates the two tokens is less who issues them than what they represent. The test is whether the token represents a bank deposit, or is a separate token issued by an issuer that holds reserve assets separately.

Sources: J.P. Morgan JPM Coin product page and June 2025 press release; text of the U.S. GENIUS Act

Deposits excluded from virtual assets by Korea's enforcement decree

In Korea, the Enforcement Decree of the Act on the Protection of Virtual Asset Users lists what is excluded from virtual assets. One item is "deposits handled in electronic form by banks and others through the Bank of Korea network, and electronic certificates equivalent to them." Put simply, these are deposits that banks and others (banks, NongHyup Bank, Suhyup Bank, the Industrial Bank of Korea and the Korea Development Bank) handle through the Bank of Korea network. The decree describes this network as a network for issuing and managing the electronic money issued by the Bank of Korea.

The provision does not contain the term "deposit token." However, in its October 2025 report the Bank of Korea wrote that the government used this decree to exclude deposit tokens from virtual assets for the first round of live transactions in Project Hangang. The U.S. GENIUS Act excludes deposits from the definition of a stablecoin, whereas Korea's decree excludes deposits handled through the Bank of Korea network from the scope of virtual assets. Deposits excluded from virtual assets are not subject to the rules that the Act on the Protection of Virtual Asset Users applies to virtual assets.

Three questions left for Korea's framework

Setting the U.S. law and Korea's decree side by side leaves three questions for the industry to consider together.

First, how to treat deposit tokens that banks issue outside the Bank of Korea network. What the decree names directly is deposits handled by banks and others through the Bank of Korea network. If a bank issues deposit tokens on a public blockchain, as with JPM Coin, how to classify those tokens remains open.

Second, whether to include deposit tokens in, or exclude them from, the definition of a stablecoin when Korea sets its won-denominated stablecoin rules. The U.S. GENIUS Act excluded deposits recorded on a blockchain from the definition. The question is whether Korea will make the same choice. The discussion on won-denominated stablecoin legislation is covered in Gaps in won-denominated stablecoin legislation, and operating standards beyond the issuing entity.

Third, who will set the standards when the two tokens are combined, for example when a stablecoin issuer holds deposit tokens as reserve assets. The Bank of Korea gave this case as an example in its October 2025 report. It cited two advantages: when redemption requests surge, an issuer could respond faster than if most of its reserve assets were held in government bonds, and policy authorities could monitor more easily in real time. Combining the two in this way would first require deciding which networks' deposit tokens to accept as reserve assets. Who will set those standards is the question that remains.

These three questions are points on which banks, fintech companies and policymakers need to gather views together when the framework is designed.

Written on the basis of laws in force and publicly available materials as of October 21, 2026.