JPMorgan and DBS are exploring tokenized deposit interoperability

Building interoperability between different systems is a top priority for global banks.

Starting with JPMorgan's JPM Coin (JPMC) in 2019, several commercial banks have launched tokenized deposits in recent years.

However, these systems currently operate separately and only facilitate transfers between accounts within the same bank.

Hoping to bridge the gap between their respective platforms, on Tuesday, November 11, JPMorgan and DBS announced plans to create a new inter-bank transfer framework for deposit tokenization.

And they are not alone in their quest for interoperability.

Commercial Bank Liabilities Move On-Chain

As tokenized deposits gain momentum, JPMorgan has emerged as a leading global player in this field.

Building on the success of JPMC, the bank launched a second token, JPMD, earlier this year.

Although both tokens are issued through JPMorgan's blockchain platform, Kinexis, their designs and applications differ.

JPMC is solely for internal settlements between JPMorgan accounts and is primarily used for corporate treasury management.

JPMD, on the other hand, was designed with broader use cases in mind, potentially including inter-bank payments.

For its part, DBS has developed a sophisticated tokenization scheme that extends to US dollar and Singapore dollar deposits.

In an initial pilot, Ant International used the DBS Treasury token to power internal cross-border transfers.

JPMorgan and DBS Support Interoperability

DBS and JPMorgan are natural partners in exploring deposit token interoperability.

Both DBS Token Services and Kinaxis are blockchain-agnostic, and both banks have extensive experience transferring value across diverse public and private networks.

They are also involved in other initiatives developing interbank frameworks for tokenized deposits.

As part of the Monetary Authority of Singapore's (MAS) Project Guardian, DBS has participated in projects exploring interoperability between deposit tokens, stablecoins, and central bank digital currencies (CBDCs).

It has also conducted blockchain-based euro transactions in partnership with Deutsche Bank.

Meanwhile, JPMorgan is involved in some of the most ambitious projects aimed at reducing friction between banks during the transition to on-chain financial infrastructure.

Along with other major institutions, it is part of the Regulated Liabilities Network, an industry-wide initiative to create a shared ledger for tokenized deposits and central bank funds.

It has also joined a coalition of US banks exploring a joint stablecoin. Finally, internationally, JPMorgan is involved in SWIFT's ongoing blockchain experiments.

The article titled "JPMorgan and DBS are exploring tokenized deposit interoperability in a multi-bank framework" was first published on ccn.com.