From Deposit Tokens to Stablecoins: A Real-World Illustration of the JPMorgan–Coinbase-Circle Flow

One of the most interesting developments in digital dollar settlement is the new interoperability between JPMorgan’s deposit token (JPMD) and Circle’s USDC through Coinbase’s Base network.

To understand why this matters—and why it fits squarely within the GENIUS Act’s regulatory boundaries—it helps to look at a concrete real-world example.

Let’s call the corporate Company X.

🚚 Scenario: Company X Needs to Pay an Overseas Supplier

Company X is a U.S. corporation that banks with JPMorgan. They keep a portion of their operating cash in a JPM corporate account, just like any major business. JPM gives them the option to “tokenize” a portion of that balance into JPMD, a bank deposit token that functions as an on-chain representation of a normal corporate bank deposit.

One day, Company X needs to pay a supplier overseas.

Here’s the critical detail:

The supplier wants to be paid in USDC, not through wires or SWIFT. They prefer USDC because settlement is instant, transparent, and far cheaper than the traditional banking rails—and because it can be converted into local currency (or used on-chain) with minimal friction.

This immediately creates a challenge for Company X: How do you convert a JPMorgan deposit (JPMD) into a GENIUS-ready stablecoin (USDC)?

That’s where the JPMorgan–Coinbase integration comes in.

🔄 Step-by-Step: How Company X Executes This Payment

1. Company X Tokenizes Part of Its JPM Balance

Company X converts $500,000 of its JPM account balance into JPMD.

This remains a JPMorgan IOU—it’s still a bank deposit, just represented as a token.

Importantly, JPMD is not a GENIUS Act stablecoin. It’s a fractional-reserve deposit token, only available to institutional clients.

2. Company X Moves JPMD to Base (Coinbase’s L2)

This is the innovation that matters.

Company X instructs JPMorgan:

“Move $500,000 in JPMD from the closed JPM network onto the Base blockchain.” JPM transfers the tokenized deposit onto Base, an environment where Company X can interact directly with USDC liquidity.

3. On Base, Company X Swaps JPMD → USDC

Once the JPMD tokens are on-chain, Company X uses Coinbase Institutional (or any approved liquidity provider) to convert:

$500,000 JPMD → $500,000 USDC

This swap happens on an open blockchain but with institutional-grade controls. Now Company X holds USDC, a fully reserved, GENIUS-Act-ready payment stablecoin.

4. Company X Sends USDC to the Supplier

With USDC in hand, Company X sends:

500,000 USDC → Supplier’s wallet

The transfer settles in seconds. The supplier immediately receives the payment—no SWIFT delays, no correspondent bank fees, no multi-day settlement risk.

5. The Supplier Converts or Uses USDC

The supplier can now:

Convert USDC into local currency

Use USDC to pay downstream vendors

Deploy USDC into on-chain treasury products

Move it to fintech banks or custodians

Swap it for other assets

In short, USDC becomes the universal settlement layer that bridges disparate financial systems.

💡 Why This Matters For Company X

- 24/7 settlement

- No SWIFT

- No wire delays

- Complete transparency

- Lower FX friction

- Immediate confirmation of receipt

💡 Why This Matters For the Supplier

- Instant payment

- No intermediary banks

- Dollar-denominated stability

- Broad utility across exchanges, fintechs, and DeFi

💡 Why This Matters For JPMorgan

This is the big strategic insight. Even though banks cannot issue GENIUS Act stablecoins, JPMorgan can still keep large corporate deposits within its ecosystem by tokenizing them and allowing controlled conversion into USDC.

This lets JPM:

- keep deposits sticky

- stay part of the settlement process

- remain relevant in an on-chain world

- avoid losing corporate flows to fintech-native stablecoin issuers

All without violating the GENIUS Act’s explicit prohibition on bank-issued stablecoins.

💡 Why This Matters For USDC (CIrcle and Coinbase)

This flow makes USDC:

- the universal dollar settlement asset

- the bridge between banks and global counterparties

- the on-chain rail connecting deposit token systems

- the liquidity hub for corporate payments

This is the part people aren’t fully appreciating yet: Every time a corporate needs to move value off a bank’s balance sheet and onto open networks, stablecoins, not deposit tokens, become the default path. And that dear reader is why banks MUST integrate stablecoins into their banking rails, or they risk being left behind.