Two leading international banks are developing a framework and performing use cases to provide opportunities within multi-currency tokenised deposit settlements.
DBS Bank and Kinexys by JP Morgan will collaborate to uncover new on-chain settlement benefits for tokenised deposits.
The partnership, announced on November 11, will see a framework established for the transferring of cross-border payments on both DBS Token Services and Kixeys Digital Payments services.
This will pilot test use cases to settle tokenised deposits on public and permissioned blockchain networks.
As both banks offer 24/7 liquidity and real-time cross-border payments, DBS and JP Morgan intend to further scale their pre-existing infrastructure by connecting to one another’s on-chain rails for faster settlements.
Use cases will see how DBS’ institutional clients in Southeast Asia can pay JP Morgan’s customers in the US via tokenised deposits, being able to exchange or redeem them on either banking platform at any time on any day, regardless of time zone constraints.
DBS revealed that JP Morgan clients would be able to pay a DBS client via JP Morgan Deposit Tokens on the Base public blockchain. The recipient would then have the ability to exchange or redeem the token to the equivalent value on DBS Token Services.
Both banks intend to uphold the value of any currency traded across banks and blockchain networks, ensuring that tokens are fungible and maintain the same speed of settlement on-chain.
“We are relentlessly focused on building the next-generation financial infrastructure, backed by deep industry expertise and strong collaborations across the globe,” said Naveen Mallela, Global Co-Head of Kinexys by JP Morgan.
“Working with DBS on this initiative is a clear example of how financial institutions can collaborate to further the benefits of tokenised deposits for institutional clients while protecting the singleness of money and ensuring interoperability across markets.”
Interoperability of tokenised deposits
Multi-currency tokenised deposits have accelerated in usage from some of the world’s leading banks over the past year.
Citi recently announced the expansion of its Citi Token Services by enabling the Euro to be settled on-chain to markets such as the UK, Singapore and the US.
DBS highlighted the accelerated growth of tokenised finance as one of the leading forces behind the partnership with Kinexys, especially when it pertains to settling cross-border transactions instantly.
A 2024 survey from the Bank of International Settlements (BIS) revealed nearly one third of commercial banks have either launched, piloted, or conducted research into tokenised deposits.
This is why DBS and JP Morgan are collaborating on a cross-issuer cross-network interoperability framework in order to advance the usability and scalability of tokenised deposits, as well to unearth new settlement process times for handling multi-currency transactions.
“Instant 24/7 payments provide businesses with the optionality, agility and speed to navigate global uncertainties and capture emerging opportunities,” said Rachel Chew, Group Chief Operating Officer and Head of Digital Currencies, Global Transaction Services at DBS Bank
“Our collaboration with Kinexys by JP Morgan to develop an interoperability framework is therefore a significant milestone for cross-border money movement, with the potential to pave the way for future partnerships.
