Alibaba's Tokenized Pay to Revolutionize Global Trade with Instant Settlements

Alibaba Group Holding Ltd. is preparing to launch a tokenized payment system by December that aims to revolutionize cross-border B2B transactions, leveraging JPMorgan Chase & Co.'s blockchain technology to bypass traditional banking intermediaries. The system, which operates using tokenized U.S. dollar and euro deposits, will enable near-instant settlements for global trade, addressing longstanding issues of slow, costly multi-currency transfers. Alibaba's president, Kuo Zhang, emphasized the urgency of modernizing global trade, calling the initiative a "paradigm shift" for e-commerce.

The platform, dubbed "Agentic Pay," will use AI to automate contract generation between buyers and suppliers, streamlining trade documentation that has historically been manual and time-consuming. This integration of artificial intelligence with tokenized finance aligns with Alibaba's broader push into AI infrastructure, including new models and chips unveiled earlier this year according to Forbes.

The company's cross-border e-commerce arm, Alibaba.com, reported a 50% year-over-year increase in active global suppliers, underscoring the scale of its international operations.

Alibaba's tokenized system diverges from stablecoins, which are typically backed by assets like bonds or fiat reserves. Instead, it uses "deposit tokens" tied to real bank deposits, a technology pioneered by JPMorgan through its JPMD token. JPMorgan's deposit token, launched on Coinbase's Base blockchain, allows institutional clients to send and receive money in seconds, 24/7, bypassing traditional banking hours and intermediaries. Alibaba's approach, which partners with JPMorgan's Kinexys blockchain unit, avoids reliance on crypto exchanges or volatile assets, a critical consideration for large-scale trade networks according to financial reports.

The move comes as China intensifies scrutiny of stablecoins, which are often issued by non-bank entities and lack regulatory clarity. Alibaba's tokenized deposits, backed by bank-held fiat, align with Beijing's preference for centralized, bank-backed digital currencies according to financial analysis. JPMorgan's deposit tokens, unlike stablecoins, can also offer yield-bearing features, potentially attracting institutional users seeking returns on idle balances.

Analysts project the partnership could process billions in annual settlements, positioning Alibaba as a leader in tokenized B2B finance according to market analysis. If the December launch succeeds, the system may pressure U.S. and European competitors to adopt similar solutions as tokenization gains traction in capital markets and global supply chains according to industry experts.