JPMorgan is partnering with six Indian banks to trial blockchain-based settlement in US dollars
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(Kitco News) – JPMorgan, the largest bank by assets under management in the United States, has formed a new partnership with six major Indian banks to launch a pilot program designed to test a blockchain-based platform for the settlement of interbank dollar transactions.
According to a Bloomberg report, HDFC Bank, ICICI Bank, Axis Bank, Yes Bank and IndusInd Bank will join forces with JPMorgan’s banking unit at Gujarat International Finance Tec-City, also known as GIFT City, to trial the new platform that enables interbank settlement of transactions in US dollars.
“We will run a pilot project in the next few months as we need to analyze the banks’ experience,” said Kaustubh Kulkarni, senior country officer for India and deputy head of the Asia Pacific region at JPMorgan.
This development comes as New Delhi seeks to position GIFT City as an international financial hub and alternative trade hub to places like Singapore and Dubai. As part of this effort, the Reserve Bank of India has also started a domestic dollar-denominated non-deliverable forward market at GIFT City.
The goal of the new blockchain project is to expand the capacity of the existing settlement system, Kulkarni said, and the platform will allow banks to process instant transactions 24 hours a day, seven days a week.
Under the current settlement system, transactions can take several hours to complete and the service is not available on Saturdays, Sundays or public holidays.
“By leveraging blockchain technology to facilitate transactions on a 24×7 basis, processing is instantaneous and enables GIFT City banks to support their own time zone and operating hours,” Kulkarni said.
The pilot project is expected to be launched on Monday and will use JPMorgan’s Onyx blockchain platform – an approved version of Ethereum designed to handle wholesale payment transactions – once final approval from the International Financial Services Center Authority is received.
JPMorgan originally launched Onyx in 2020 to use blockchain technology to improve the quality of wholesale payment transactions. According to Tyrone Labbone, program manager for Onyx, the platform is already being used by Goldman Sachs, DBS Bank and BNP Paribas, and another 15 banks and broker-dealers are looking to sign up.
As of April 27, JPMorgan has processed nearly $700 billion in short-term loan transactions using its Onyx platform, Labbone said, and clients have been able to trade tokens denoting ownership of US Treasurys, as well as use blockchain bank accounts known as JPM coin.
Going forward, Labbone said JPMorgan plans to use Onyx to focus on tokenizing traditionally hard-to-fund assets, such as money market funds, and will use them as collateral. Eventually, the plan is to expand Onyx to issue a wider range of blockchain-based assets, including private funds.
In February, JPMorgan announced its plans to open a crypto innovation lab in Athens, Greece, to foster developments in blockchain technology, artificial intelligence (AI) and cryptography, and to build out blockchain-related capabilities to support Onyx.
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