JP Morgan to pilot dollar blockchain accounts in India’s GIFT City financial center – Ledger Insights
Dollar payments in India are usually made by holding Nostro accounts in US-based banks. In India’s GIFT City, an international financial centre, JP Morgan’s recently established branch has been given the go-ahead for a pilot to act as an international settlement bank for other GIFT City banks. In a month or so, banks will be able to hold foreign currency accounts with JP Morgan in India as blockchain-based bank accounts, enabling 24/7 settlement rather than being limited to US business hours, according to the Economic Times.
GIFT City Gujarat aims to compete with other major international financial centers such as Singapore, Hong Kong, Abu Dhabi Global Market (ADGM) and Dubai’s IFC. Therefore, it is considered a quasi-foreign territory with rules that differ from the rest of India. Apart from hosting branches of various Indian banks, last year several international system banks set up shop in the centre, including JP Morgan, Deutsche Bank and MUFG.
JP Morgan will operate a sandbox environment that enables these banks to open on-chain Nostro accounts. While the interfaces use standard SWIFT messages, the ability to support instant settlement and 24/7 payments is because the payments are processed using a distributed ledger in the JP Morgan ecosystem.
In other words, payments are made from one bank’s account with JP Morgan to another bank’s account with JP Morgan. Payments outside of this ecosystem will not be supported 24/7. That said, JP Morgan globally processes around ten trillion dollars in payments daily. So many counterparties want a JP Morgan account.
JP Morgan isn’t the only one offering blockchain-based accounts. In the US, TassatPay offers similar technology. The recently closed Signature Bank used the technology to support 24/7 digital asset payments and others such as load payments, which was ranked the highest in terms of number of transactions. Often, cargo will only be released once payment has been made, which can stop goods being transported at weekends, hence the attraction of a 24/7 system.
Blockchain is a key focus of JP Morgan’s Onyx unit, home of the JPM Coin blockchain bank account technology. Onyx is also participating in trials as part of Project Guardian with the Monetary Authority of Singapore for deposit tokens. The US bank defines these as tokens native to a public blockchain rather than blockchain-based accounts (JPM Coin), which represent money in a legacy account. In addition, JP Morgan co-founded Partior, a Singapore-based network that supports blockchain-based multi-currency transactions.
