How JPMorganChase plans to jolt 'on-chain' finance

• Key insights: JPMorganChase's Kinexys blockchain unit is looking to scale digital assets, and is betting on growing demand.  
• What's at stake: Banks and fintechs are selling services for stablecoins, cryptocurrency and tokenized deposits.
• Forward look: JPMorganChase is looking to attract banks as partners to scale on-chain finance.

As rivals such as Citi stake a position in digital assets, JPMorganChase is preparing its blockchain unit for what it hopes is a much larger world.

"Blockchain can touch almost every part of the financial services industry," Kara Kennedy, global co-head of the bank's blockchain unit, Kinexys by J.P. Morgan, told American Banker. "It opens the potential for speed, transparency and much greater programmability."

Kennedy, who is based in Edinburgh, Scotland, became co-head of the bank's blockchain division in August, joining the Singapore-based Naveen Mallela as co-head. Mallela was named to his current job in August 2024. Kennedy oversees Kinexys Digital Assets, which focus on tokenization and blockchain project development. Mallela manages payment projects, such as Kinexys Digital Payments and Kinexys Liink.

While JPMorganChase has been working on blockchain and digital asset technology for at least a decade, the overall digital asset market looks likely to enter a new, more mainstream phase as corporations and banks move payments and other functions to distributed ledgers. 2026 will see a "significant evolution" in the financial ecosystem as digital assets evolve from "peripheral disruptors" to fundamental elements intertwined with traditional finance, Coinshares analysts predicted in a research report. Financial institutions are taking notice. Banks with more than $10 billion of assets say 65% of clients are asking for more information about digital assets, according to research from American Banker, which found that 50% of credit union clients and 42% of community bank clients are making similar queries.

A bigger pie?

Despite this interest, digital assets such as cryptocurrency, stablecoins and tokenized deposits are not widely used for payments.

For example, at JPMorganChase, Kinexys currently processes on average more than $5 billion daily in transaction volume, while J.P. Morgan Payments processes $10 trillion payments daily, according to the bank.

As part of a strategy to expand Kinexys, the bank has done pilots for uses such as tokenizing traditional assets as collateral in B2B financing and securities. "It's now about demonstrating the commercial value," Kennedy said.

JPMorganChase

JPMorganChase also recently made its JPM Coin deposit token, or JPMD, available for the bank's institutional clients on Base, a Coinbase-affiliated public blockchain. By offering an option beyond its private blockchain, JPMorganChase hopes to reach a wider audience by appealing to bank partners that want an alternative to stablecoins, which are dominated by cryptocurrency firms and other fintechs.

"While stablecoins get talked about a lot, almost all of them are dollar-backed," Mallela said, noting that JPM Coin supports dollars today, but plans to support euros and pounds in the future, to create more options for banks and financial institutions.

The bank is starting with "narrow" use cases, such as intercompany settlements and clearing for financial institution clients, with plans to expand uses for programmable payments. Kinexys' early clients include real estate loan service provider Trimont, which uses the blockchain to process transactions in near real time, down from the typical window of about two days. In another move, in late December JPMorganChase launched My Onchain Net Yield Fund on the public Ethereum blockchain. MONY is a private placement fund enabling investors to earn U.S. dollar yields by subscribing through Morgan Money, the bank's open architecture trading and analytics platform for liquidity management.

"This is enabling our next phase, which is to be active in public blockchains," Kennedy said.

Cooperation

JPMorganChase's challenge will be to build support among other banks for its blockchain technology. "The opportunity for us comes with the complexity," Kennedy said. "What is the value for a particular institution?"

Interoperability can also be attractive, according to Mallela.

"Tokenization is bringing multiple entities into shared ledgers," Mallela said. "You want to move away from a world where every organization has its own ledger. And shared ledgers mean institutions have to come together."

JPMorgan's letting its deposit token operate on a public blockchain is a watershed, Eric Grover, a principal at Intrepid Ventures, told American Banker.

JPMorganChase

"Institutional users can now operate on crypto-exchanges and longer-term the economy writ large relying directly on regulated interest-bearing deposits to make payments," Grover said. "It will make collateral management easier. And it establishes a beachhead from which deposit tokens can seek/explore more use cases across the financial services and payments ecosystem."

Since JPM Coin is still permissioned, it can only be transferred between whitelisted clients that have completed JPMorgan's onboarding process, Aaron McPherson, principal at AFM Consulting, told American Banker. This is important for regulatory reasons, such as know-your-customer or anti-terrorist-financing rules, according to McPherson.

"Therefore, it plays in somewhat of a different space than Circle or Tether's stablecoins, which are not permissioned and whose users will have to find other ways of complying with the rules," McPherson said. The migration to a public blockchain is more due to demand for a cheaper platform than any opening up of the stablecoin, McPherson said. "I continue to see private permissioned networks as important for safety and security, especially for cross-border payments," he said. "Therefore, the impact may be more in terms of showing other banks how they can safely implement blockchain-based strategies than in competing with truly open alternatives."