JPMorgan launches blockchain-based dollar accounts for banks in India
Investment bank JPMorgan has announced that it will trial applications of blockchain technology to provide dollar-based settlement services to financial institutions in India.
According to a report by the Economic Times, JPMorgan’s blockchain experiment will be limited to banks in India’s GIFT City, an economic free trade zone that competes with international financial centers such as the Abu Dhabi Global Market (ADGM). The report noted that JPMorgan’s pilot would allow participating banks to open on-chain Nostro accounts to make dollar payments.
By using blockchain, JPMorgan says settlement times will be made instantaneous, and participants will be allowed to transact 24/7. Traditionally, Indian banks relied on the SWIFT payment system to conduct transactions, but they were hamstrung by the restriction of operating only during US business hours, which made weekend transactions impossible.
JPMorgan’s plans for blockchain-based accounts are not an entirely new concept, as US-based TassatPay proposed a similar offering to users. Controversial Signature Bank also relied on blockchain to support 24/7 payments to its customers, and given its effectiveness, pundits predict large-scale adoption of the technology.
The experiments are part of India’s plans to improve GIFT City to make it compete favorably with other global free trade zones. GIFT City is not subject to the brunt of Indian regulations and is considered a quasi-foreign territory, leading several international institutions to set up operations in the country, including Deutsche Bank and MUFG.
JPMorgan has been working with blockchain since 2022 with the creation of the Onyx entity and the development of the JPM coin. The global investment bank was roped in as a co-founder of Partior, a blockchain-based network that supports multiple transactions based in Singapore.
Affirms India’s ambitions
India has been steadily moving towards full-scale blockchain adoption, and JPMorgan’s latest initiative could provide a boost to realizing the goals. The country’s finance minister, Nirmala Sitharaman, confirmed that it would make blockchain the focal point of its technological ambitions, while aiming for a 46% adoption rate.
In line with the government’s stance, the National Institution for Transforming India (NITI) Aayog recently announced the launch of a blockchain learning module, which was designed to deepen the talent pool for global digital currency firms looking to set up operations in the country.
Blockchain has since found applications in the healthcare, security, manufacturing and real estate sectors of the Indian economy, but a draconian tax policy against virtual asset providers casts a shadow of doubt on the government’s ambitions.
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