**DBS Bank and Kinexys Collaborate to Develop Interoperability Framework for Tokenized Value Transfers**
Today, Singapore’s DBS Bank and Kinexys, a J. P. Morgan company, have joined forces to create an interoperability framework that facilitates tokenized value transfers between their respective on-chain ecosystems. This innovative framework aims to establish a new industry standard for the real-time, international settlement of tokenized deposits across both public and permissioned blockchains.
Currently under development, the framework will enable seamless transactions between clients of Kinexys Digital Payments and DBS Token Services on multiple blockchain networks. Specifically, on the public base blockchain, a J. P. Morgan institutional client would use JP Morgan Deposit Tokens (JPMD) to make payments to a DBS client. Upon receiving the JPMD tokens, the DBS client can choose to convert them into DBS tokens or redeem them for fiat currency.
DBS has emphasized that the goal is to build a flexible framework that others can adopt, highlighting its cross-blockchain compatibility to ensure smooth interoperability across different blockchain environments.
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### Boosting Blockchain Interoperability: Insights from DBS and Kinexys Leaders
Rachel Chew, Group Chief Operating Officer and Head of Digital Currencies, Global Transaction Services at DBS Bank, stated that businesses can better navigate global risks and capitalize on new opportunities thanks to the optionality, agility, and speed offered by instant 24/7 payments. She emphasized that interoperability plays a critical role in reducing fragmentation within the digital ecosystem.
“Interoperability guarantees the safe cross-border transfer of full value as the digital asset ecosystem expands. Our collaboration with Kinexys by J. P. Morgan to develop this interoperability framework is a significant milestone for cross-border money movement, with the potential to pave the way for future partnerships,” said Chew.
Naveen Mallela, global co-head of Kinexys, noted that working with DBS clearly demonstrates how financial institutions can collaborate to preserve the uniqueness of money and ensure market interoperability. He added that this partnership magnifies the advantages of tokenized deposits for institutional clients.
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### Meeting Industry Demand Amid Tokenized Finance Growth
The collaboration comes at a time of rapid expansion in the tokenized finance sector. According to a 2024 Bank for International Settlements poll, commercial banks in nearly one-third of surveyed jurisdictions have introduced, tested, or studied tokenized deposits.
Through their partnership, DBS and Kinexys are committed to enhancing the accessibility and scalability of tokenized deposits via a cross-issuer, cross-network interoperability architecture. DBS underscored that this initiative will revolutionize how multinational corporations manage their funds, all while ensuring strict regulatory compliance.
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### Kinexys Advances JPM Deposit Token on Public Blockchain
This interoperability framework builds on J. P. Morgan’s prior research on standards for bank tokens operating on open blockchains. In May, the Massachusetts Institute of Technology’s Digital Currency Initiative (MIT DCI) announced a collaboration with J. P. Morgan to investigate and develop a payment token prototype on an Ethereum Virtual Machine (EVM)-based blockchain.
The MIT DCI and JPMorgan prototype supported customer transactions while enabling issuing banks to enforce payment controls and perform administrative tasks. The project recommended largely using existing Ethereum standards, with two additional standards suggested specifically for interbank transactions. It also proposed relaxing certain restrictions on blockchain-based bank payments.
On June 24, Kinexys revealed a proof-of-concept (PoC) for the USD J. P. Morgan Deposit Token (JPMD) on a public blockchain. The JPMD PoC offers a stablecoin alternative for native cash settlement and payment use cases tailored for J. P. Morgan’s institutional clients. For the pilot, JPMD was issued on BaseScan, an Ethereum Layer 2 blockchain network integrated with Coinbase.
According to Kinexys, this JPMD pilot represents an extension of their ongoing efforts to innovate digital currency solutions. This journey began in 2019 with the launch of Kinexys Digital Payments Blockchain Deposit Accounts on private permissioned blockchain infrastructure.
JPMD is noted as J. P. Morgan’s first product offering institutional clients a digital currency substitute for stablecoins on public blockchain infrastructures.
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https://bitcoinethereumnews.com/finance/dbs-and-j-p-morgans-kinexys-develop-interoperability-framework-for-tokenized-deposits/
