JPMorgan’s recently rebranded digital assets unit, Kinexys, will enable commercial clients of India’s Axis Bank to send and receive USD transfers in real-time both domestically and cross-border.
According to Reuters, this will be the first time organizations in India will have access this functionality. Two key benefits of this feature include greater flexibility and increased liquidity due to instant settlement.
In a statement, Naveen Mallela, Global Co-Head at Kinexys, gave an example of how this capability could be advantageous—allowing companies in India to make dollar payments to Middle Eastern organizations on Sundays, which are workdays in the region.
Solving for Forex Issues
Kinexys began as Onyx, one of the world’s first bank-operated blockchains. JPMorgan rebranded the platform last year, announcing its objective was to drive on-chain foreign exchange conversions. The program initially focused on facilitating real-time dollar-to-euro conversions.
There is a demonstrable need for this type of solution, as demand for cross-border payments has increased, and the cost and efficiency of currency conversions remain pain points.
“The forex market is one of the largest and most liquid markets in the world, and 24/7 instant settlement has been much needed,” Joel Hugentobler, Cryptocurrency Analyst at Javelin Strategy & Research told PaymentsJournal. “This will help reduce counterparty risk in multi-bank transactions and should provide greater transparency to the participants involved.”
A Blockchain-Based Financial Ecosystem
The unique demands of cross-border payments have led to much speculation about which payment rail will eventually become the platform of choice.
Cryptocurrencies are attractive for cross-border transactions due to their decentralized nature, but their volatility often makes them impractical for many use cases. For this reason, stablecoins—designed to track fiat currencies—have emerged as a leading contender.
However, global networks operated by credit card companies like Visa and Mastercard could also serve this purpose. Additionally, global messaging network SWIFT and Europe’s SEPA have also emerged as potential solutions.
With so many offerings, it becomes more likely that multiple platforms will coexist in the global payments landscape.
As Mallela noted in his statement: “Our work with Axis Bank marks the next step in creating a growing industry-wide blockchain-based financial ecosystem with interoperability among central bank digital currencies, stablecoins and other digital currency solutions.”
