JPMorgan and DBS Bank have announced a collaboration to develop an interoperable framework for cross-border transfers of tokenised deposits. The initiative seeks to enable 24/7 settlements between public and permissioned networks and mainly affects institutional clients and bank treasuries that require faster and more traceable cross-border liquidity.
The agreement outlines a hybrid architecture: JPMorgan brings its Kinexys initiative and the JPMD, operating as a proof of concept on an Ethereum Layer 2 (Base) with Coinbase as public chain partner; DBS incorporates DBS Token Services on a permissioned chain.
The intended outcome is an interoperability channel that allows moving tokenised deposits between public and private networks, offering continuous settlement and greater auditability, according to JPMorgan and DBS.
The initiative aims to reduce latencies and costs in international payments, improve liquidity management for institutional clients and preserve the “singularity of money”—that is, preserve fungibility and the regulated claim over the deposit, regardless of the ledger that carries it. The blockchain infrastructure adds immutable traceability and potentially reduces operational and settlement risks.
“Instant 24/7 payments provide businesses optionality, agility and speed to navigate global uncertainties”, said Rachel Chew, Group COO and Head of Digital Currencies at DBS, explaining the interoperability objective.
What is the purpose of this operation?
If adopted, the framework could increase the speed and frequency of capital flows between financial centers, improving treasury efficiency. It may require new governance controls for interoperability between public and permissioned networks.
It could imply capital and compliance costs if regulators reclassify associated risks, with attention from bodies like the MAS and frameworks such as international capital requirements.
It would raise the priority of cybersecurity and operational monitoring due to the added complexity of interchain bridges.
In practical terms, the initiative combines a hybrid architecture: public Layer 2 (Base) plus the DBS permissioned chain, centered on JPMD, the USD deposit token issued by J.P. Morgan, with the objective of 24/7 settlements and optimized institutional liquidity, while facing risks from heterogeneous regulation, capital requirements and cybersecurity.
The framework is still under construction; next steps indicated by the parties include interoperability testing and scaling to institutional clients, with continuous regulatory monitoring by authorities such as the Monetary Authority of Singapore, according to information provided by the entities.
