JPMorgan to enable USD-EUR FX settlements on blockchain

In a significant development for the financial industry, JPMorgan Chase & Co. has announced plans to enable foreign exchange (FX) settlements between the dollar and euro on its blockchain platform, Kinexys.

Originally launched in 2020, Kinexys will integrate JPM Coin — the bank’s proprietary digital currency — to process FX transactions, potentially introducing new efficiencies in cross-border payments.

As global banks explore digital currencies and blockchain for transactional efficiency, this move underscores JPMorgan’s ambition to harness blockchain in core banking operations, despite continued scepticism among institutional investors.

The platform’s recent shift reflects the bank’s strategy to tap into blockchain technology to enhance liquidity management and offer seamless transaction experiences.

JPM Coin’s rapid growth in transaction volume

As per a Bloomberg report, Kinexys, previously known as Onyx, integrates JPM Coin, which has seen substantial growth in transaction volume since mid-October 2023.

JPM Coin, a tokenized version of the US dollar, recently reported $1 billion in processed transactions per day, a milestone that highlights increasing trust in digital settlements.

Designed to streamline high-volume transactions, JPM Coin reduces the traditional complexities in FX settlements, allowing instantaneous transfers across JPMorgan’s global network.

By integrating FX with blockchain, JPMorgan aims to provide a faster, more cost-effective alternative to conventional settlement methods.

FX spreads to generate new revenue streams

JPMorgan sees significant revenue potential in utilising blockchain to capture FX spreads.

According to Naveen Mallela, global co-head of Kinexys, the FX feature aims to introduce “a new revenue stream” from these spreads, offering the bank an additional profit channel while enhancing transaction efficiency for clients.

The push towards blockchain-powered FX operations aligns with JPMorgan’s broader strategy to offer comprehensive digital services, positioning itself at the forefront of financial innovation.

The shift could lead to reduced operational costs for high-frequency traders and institutional clients, who benefit from real-time settlements and reduced counterparty risks.

Institutional traders still wary of blockchain

Despite JPMorgan’s advances, blockchain adoption in traditional finance remains slow, with many institutional traders expressing caution.

In an internal survey conducted by JPMorgan with over 4,000 traders, only 7% considered blockchain as a viable asset within the next three years.

This reluctance stems from concerns over regulatory uncertainties, security vulnerabilities, and the integration challenges posed by blockchain technology in a highly regulated banking environment.

The steady growth of JPM Coin’s transaction volume indicates increasing acceptance, suggesting that blockchain’s role in finance may expand as technology matures and regulation stabilises.

JPMorgan’s blockchain ambitions

JPMorgan’s commitment to blockchain, exemplified by Kinexys, demonstrates a strategic focus on innovation amid regulatory and market challenges.

As the banking giant enhances its blockchain infrastructure, the FX feature represents a calculated effort to merge blockchain’s efficiency with the traditional banking model, attracting clients interested in digital assets without fully transitioning to volatile cryptocurrency markets.

For now, the success of Kinexys and JPM Coin will depend on their ability to bridge the trust gap among institutional clients, making blockchain-based FX settlement a standardised, reliable part of cross-border finance.

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