Singapore’s DBS and J.P. Morgan’s Kinexys are working on an interoperability framework to enable tokenised deposit transfers across their respective onchain ecosystems.
This partnership aims to establish an interoperability layer between the two, allowing transactions to take place across both public and permissioned networks, hence expanding client access. Both institutions already provide clients with round-the-clock liquidity and real-time payment settlement via their blockchain-based platforms.
JPM Deposit Tokens
According to the news release, customers using JPM Deposit Tokens, which are based on Ethereum Layer 2 Base, may be able to transact with those utilising DBS Token Services, which run on a permissioned blockchain.
Such interactions have always been challenging due to limited native interoperability and accompanying security considerations.
“Working with DBS on this initiative is a clear example of how financial institutions can collaborate to further the benefits of tokenised deposits for institutional clients while protecting the singleness of money and ensuring interoperability across markets,” said Naveen Mallela, global co-head of Kinexys.
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Boom in tokenisation
Tokenisation has emerged as a prominent initiative among global financial institutions in recent years. Tokenised deposit services, which would enable customers to make payments over blockchain rails, were apparently being investigated by BNY Mellon, the largest custodian in the world by assets under custody, last month.
In response to encouragement from Bank of England Governor Andrew Bailey, a number of significant UK lenders, including Barclays, Lloyds, and HSBC, have said they are initiating a live trial of tokenised sterling deposits.
Leader’s quote
Rachel Chew, Group Chief Operating Officer and Head of Digital Currencies, Global Transaction Services, DBS Bank, said, “Instant 24/7 payments provide businesses with the optionality, agility and speed to navigate global uncertainties and capture emerging opportunities.”
“As the digital asset ecosystem continues to grow, interoperability remains a critical piece in reducing fragmentation and ensuring that the full value of tokenised money can be transferred safely across borders.”
Other developments
JP Morgan has launched Kinexys Digital Payments in GBP, a third currency. As a result, it can now facilitate 24/7 corporate payments and foreign exchange for dollars, euros, and pounds. The first clients to use the sterling services in London are LSEG’s SwapAgent and commodities trader Trafigura.
Kinexys Digital Payments technology enables Siemens and B2C2 to settle cross-border transactions in US dollars, British pounds, and euros with nearly immediate finality.
Traditional FX payment methods, which often only operate during the week and may take days to complete, are what Kinexys want to eliminate.
Also Read: JPMorgan To Let Institutional Clients Pledge Bitcoin And Ether As Loan Collateral