According to Bloomberg News, JP Morgan & Chase Co., the renowned Wall Street giant, is set to launch a blockchain-based system in India for real-time settlement of interbank dollar transactions. The system will undergo a pilot phase to evaluate the experience of participating banks.
The initiative is being carried out in collaboration with six of India’s largest banks, including HDFC Bank, ICICI Bank, Axis Bank, Yes Bank, IndusInd Bank, and JP Morgan’s local unit.
The primary purpose of JP Morgan‘s blockchain settlement system will be to settle interbank dollar transactions in Gujarat International Finance Tec-City, also known as GIFT City. GIFT City is India’s ambitious endeavor to establish an international financial and trade hub that rivals Dubai and Singapore.
Currently, the domestic non-deliverable forward market in GIFT City operates using a traditional banking system that takes several hours to settle transactions and is inactive on weekends and public holidays. JP Morgan aims to replace this legacy settlement system with its new blockchain project, leveraging its proprietary blockchain platform Onyx, if the pilot phase proves successful. This transition will enable real-time settlement of transactions at any time, significantly improving efficiency.
Kaustubh Kulkarni, the senior country officer for India and vice chairman of Asia Pacific at JP Morgan, emphasized the benefits of blockchain technology, stating, “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 actively exploring blockchain technology since 2014, participating in various blockchain initiatives led by traditional banks.
Although it left the R3 consortium in 2017, the company established its blockchain unit and launched Onyx in 2020. Onyx offers a range of blockchain-based services for financial institutions, including secure data sharing, multi-currency transfers and clearing, and tokenization of traditional assets into digital form.
Furthermore, Onyx provides a platform for institutions seeking to develop their proprietary blockchains.
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