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American investment banking giant JPMorgan Chase is pursuing a patent for a distributed system that uses blockchain technology to issue virtual depository receipts that sound suspiciously like initial coin offering (ICO) tokens. The patent application, filed by JPMorgan in January and published by the U.S. Patent & Trademark Office (USPTO) on Thursday, outlines a method whereby users on a distributed network such as a blockchain can tokenize assets and trade these virtual depository receipts. To create a security token, an originator such as an asset owner or broker will encumber the asset by entrusting it to a qualified custodian, who will then authorize a virtual receipt for the deposited assets. This virtual depository receipt would essentially be a security token, regulated under the authority of the U.S. Securities and Exchange Commission (SEC) or other local securities regulators. This designation would necessarily restrict how and where the tokens could be traded. Depending on the nature of the asset, a token holder would also be able to redeem the receipt for the underlying asset by transferring it to the custodian, who would then cancel the tokens. Notably, JPMorgan believes that one use case for this proposed system is to allow companies to hold initial public offerings (IPO) in a blockchain environment, more or less fulfilling the ultimate promise of the initial coin offering, though it is doubtful both that the firm would ever acknowledge that fact or refer to such token distribution events as ICOs. Read More - Click The Link In Bio via ccn.com