ADVERTISEMENT

Company News

JPMorgan to Offer Instant Dollar-Euro Settlement Via Blockchain

By Suvashree Ghosh
A customer counts 100 U.S. dollar banknotes and 50 euro banknotes inside a foreign currency exchange bureau in the Beyoglu district of Istanbul, Turkey, on Thursday, May 14, 2020. The global demand shock that followed the coronavirus pandemic is exposing a key vulnerability for Turkey’s external finances, with stimulus at home worsening an imbalance between imports and exports while creating another pressure point for the lira. Photographer: Kerem Uzel/Bloomberg (Kerem Uzel/Bloomberg)

(Bloomberg) -- JPMorgan Chase & Co. will soon offer instant settlement for foreign-exchange conversions between the dollar and the euro via its Kinexys blockchain platform and plans to add sterling to the service over time.

The system will utilize the JPM Coin tokenized deposit native to Kinexys, which processes more than $2 billion of transactions daily, according to interviews with executives from the US bank as well as a statement issued Wednesday.

“If you look at JPM Coin, we generate revenues from fees, we also generate revenue from liquidity from holding those balances,” said Naveen Mallela, global co-head of the bank’s Kinexys digital ledger, formerly known as Onyx. “We’re coming up with a third revenue stream from FX spreads.”

JPM Coin currently facilitates dollar- and euro-denominated payments for participating institutions via Kinexys, a private blockchain. The initiative is one of the few examples of a digital ledger deployed at scale by a large bank, but still handles only a fraction of the $10 trillion moved by JPMorgan daily.

The upcoming functionality is the ability to convert between the dollar and the euro with instant settlement. Sterling is to be added once approvals are in place, according to the bank. Traditional foreign-exchange settlement ranges from the same day to as many as two days depending on the currency pair.

The instant settlement service will help the world’s largest payments facilitator to lure more clients, including fintech companies, and takes the blockchain project closer to breaking even, Mallela said in an interview. 

Balancing out cost and revenue may take another three to five years, Umar Farooq, global co-head of JP Morgan Payments, said in an interview. Onyx has been renamed Kinexys in part to become less of a “mysterious thing,” he said.

The number of transactions on Kinexys has grown tenfold year-over-year, Farooq said. “We can go another 10x and we’ll be OK,” he said. “We just want to make sure that the platform is showing that it can now operate at scale.”

©2024 Bloomberg L.P.