- JP Morgan’s JPMorgan.com/kinexys/index”>Kinexys Digital Payments was used for the first time to settle a tokenized money market fund transaction on Ondo Finance’s blockchain.
- The transaction linked a bank account on a permissioned blockchain with a public blockchain, using ChainLink’s cross-chain technology.
- The move highlights growing interest in blockchain-based payments and tokenized collateral among traditional finance firms.
Ondo Finance has announced that its OUSG tokenized money market fund settled a delivery versus payment transaction using JP Morgan’s Kinexys Digital Payments on the Ondo blockchain testnet. The transaction integrated a blockchain-based bank account on the Kinexys permissioned network for payment with activities on a permissionless blockchain, leveraging cross-chain tools from Chainlink.
According to JP Morgan, Kinexys Digital Payments—previously known as JPM Coin—supports institutional clients’ evolving payment needs. “Kinexys Digital Payments is designed to support J.P. Morgan’s institutional clients by enhancing the current payment experience while anticipating clients’ evolving payment needs as they engage in transactions on emerging infrastructures, including public blockchain,” said Nelli Zaltsman, Head of Platform Settlement Solutions. JP Morgan reports that transaction volumes on Kinexys have surpassed $1.5 trillion to date.
Most public blockchain transactions are currently settled either with stablecoins or through off-chain payments. While some crypto-native businesses prefer to hold stablecoins, many companies keep their cash in traditional bank accounts. Converting funds from a bank account to stablecoins adds extra steps. Tokenization aims to remove these barriers, but firms still face fragmentation when dealing with both stablecoins and bank accounts.
The test transaction with the OUSG fund represents momentum among traditional finance firms for using tokenized collateral, especially in areas like margin payments for derivatives. Some firms are comfortable using products like BlackRock’s BUIDL, a tokenized money market fund, but remain hesitant about stablecoin exposure.
Ondo Finance has developed collaborations with a range of traditional asset managers, including BlackRock, Fidelity, Franklin Templeton, Wellington, and WisdomTree. OUSG is backed by other tokenized money market funds, allowing the company to help provide liquidity. The firm has also partnered with Mastercard’s Multi-Token Network.
Chainlink provided the technical link between Kinexys and the Ondo blockchain. Its Runtime Environment coordinates activities across different blockchains and existing systems, making it possible to synchronize settlement between platforms.
Discussions continue about issuing deposit tokens like Kinexys directly on public blockchains to further expand settlement options, but no launch timeline has been provided.
For more insights about how banks are exploring stablecoins, tokenized deposits, and distributed ledger payments, further details can be found in the Ledger Insights report.
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