JP Morgan eyes blockchain-tech to improve interbank dollar settlement in India
The blockchain-based settlement system will be launched in partnership with six of the largest banks in the country.
Wall Street giant JP Morgan & Chase Co. is launching a new blockchain-based system in India to settle interbank dollar transactions in real-time, Bloomberg News reported June 5.
The lender will run a pilot phase for the system to assess participating banks’ experience. The project will be launched in partnership with six of the largest banks in the country — including HDFC Bank, ICICI Bank, Axis Bank, Yes Bank and IndusInd Bank, and JP Morgan’s local unit.
JP Morgan’s blockchain settlement system will mainly be used to settle interbank dollar transactions in Gujarat International Finance Tec-City — also known as GIFT City.
GIFT City is India’s attempt at establishing an international financial and trade hub in the country that is on par with — and a potential alternative to — Dubai and Singapore.
The Indian central bank recently launched a domestic non-deliverable forward market in GIFT City that is settled in dollars. The market currently employs a traditional banking system that can take multiple hours to settle transactions and does not operate on weekends or public holidays.
JP Morgan’s intends to replace the legacy settlement system with the new project via its proprietary blockchain platform Onyx if the pilot phase is completed successfully. This will allow the market to settle transactions in real-time, at any time.
Kaustubh Kulkarni, senior country officer, India and vice chairman, Asia Pacific at JP Morgan said:
“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.”
JP Morgan has been flirting with blockchain technology from as early as 2014 , with fingers in multiple blockchain-related pies that were being developed by traditional banks. The lender was part of the R3 consortium for multiple years until it left in 2017 and later formed its own blockchain unit.
JP Morgan launched Onyx in 2020 as part of its strategy to use blockchain technology for traditional banking use cases and has developed multiple blockchain-based services for financial institutions over the years since its launch.
Onyx currently offers financial institutions the ability to share sensitive data, transfer and clear multiple currencies and tokenize traditional assets into digital ones using blockchain technology through its platform.
Onyx also offers a service for institutions that are looking to launch their own proprietary blockchains.