JPMorgan Chase & Co. is preparing to launch a new instant settlement service for foreign-exchange (FX) conversions between the US dollar and the euro via its Kinexys blockchain platform, signaling a further commitment to blockchain technology in global finance. The system, which will initially cover dollar-to-euro FX transactions, aims to reduce settlement times significantly, with plans to include the British pound once regulatory approvals are obtained.
The Kinexys platform, previously known as Onyx, utilizes JPM Coin, a tokenized deposit created by the bank, to facilitate these transactions. Executives at JPMorgan explained that the blockchain-based system is currently handling transactions valued at over $2 billion daily. By introducing instant FX settlements, the bank expects to streamline its services, offering more efficient options for clients requiring rapid currency exchanges. JPM Coin has so far been used primarily for dollar and euro payments within a closed network of participating institutions. This initiative represents one of the few large-scale blockchain implementations within the banking sector, albeit covering only a small fraction of the $10 trillion in transactions processed by JPMorgan daily.
The Kinexys platform’s new feature for instant dollar-euro conversion provides an alternative to traditional FX settlements, which can take from the same day to as long as two days depending on the currency pairs. This move places JPMorgan ahead of the curve in blockchain-enabled FX transactions, which could attract a broader client base, including fintech firms seeking faster and more efficient financial services. By integrating this capability, the bank positions itself as an innovative leader in blockchain applications for mainstream finance.
Executives highlighted that JPM Coin generates revenue not only from transaction fees but also from liquidity stemming from holding currency balances. With the introduction of the FX conversion service, the platform is set to establish a third revenue stream from FX spreads, enhancing JPMorgan’s blockchain revenue model. The addition of sterling transactions will further expand this revenue potential once regulatory approvals are in place.
In discussing the platform’s financial outlook, the global co-head of JPMorgan Payments indicated that the Kinexys project could take another three to five years to achieve cost-revenue parity. Since its launch, the transaction volume on Kinexys has expanded significantly, showing a tenfold year-over-year growth. JPMorgan believes the platform could support even greater transaction volumes, a factor that underscores its readiness to operate at a larger scale. By rebranding from Onyx to Kinexys, the bank aims to present the system as a more accessible and transparent solution within the digital payment landscape.
This shift to real-time settlements in FX transactions highlights JPMorgan’s commitment to harnessing blockchain’s potential in traditional banking operations. The instant settlement service is poised to offer faster processing, improved liquidity management, and a more user-friendly experience for clients, positioning Kinexys as a viable solution in the rapidly evolving digital finance space.
