JPMorgan has developed instant dollar-euro settlements using its Kinexys blockchain, with the new feature slated to go live in the coming months.
According to a Bloomberg News report, the bank will leverage its proprietary JPM Coin to facilitate fast, secure transactions for participating institutions. Once regulatory approvals are obtained, JPMorgan plans to add sterling transactions to the platform.
Kinexys processes over $2 billion in transactions daily and currently supports dollar- and euro-denominated payments. Yet, that figure represents a small fraction of JPMorgan’s $10 trillion daily payments volume.
Streamlining exchanges
Naveen Mallela, JPMorgan’s global co-head of Kinexys, said the lender aims to leverage blockchain technology to reduce operation costs and bolster liquidity for its clients in the traditional banking industry, where dollar-euro exchanges usually take up to two days to settle.
Mallela added:
“If you look at JPM Coin, we generate revenues from fees, we also generate revenue from liquidity from holding those balances. We’re coming up with a third revenue stream from FX spreads.”
As Kinexys grows, the platform’s transaction volume has increased tenfold over the past year, with executives anticipating further scaling.
Seeking profitability
However, as JPMorgan expands functionality and customer reach, its blockchain operation is not profitable. Umar Farooq, global co-head of JPMorgan Payments, noted that balancing costs with revenue may take three to five years.
The bank’s proprietary blockchain division, Onyx, offers four major products, from blockchain-based clearing services to a tokenization platform.
In November 2022, the lender executed its first foreign currency trade on a public blockchain a forked version of the leading money market, Aave, to issue and swap 100,000 Singaporean dollars for Japan’s yen with SBI Digital Asset Holdings.
The transaction was conducted on the Polygon blockchain, a public network, as a part of the Monetary Authority of Singapore’s Project Guardian.
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