Singapore’s DBS Bank (NASDAQ: DBSDY) is set to launch an interoperability framework that connects its distributed ledger technology platform to Kinexys, a blockchain system by JPMorgan (NASDAQ: JPM) that supports instant, round-the-clock settlements.
The framework will connect the DBS Token Services and Kinexys Digital Payments, the two lenders revealed this week.
The former is a suite of tools deployed on a permissioned blockchain that lets the bank issue and manage tokenized assets. It offers clients 24/7 settlements and workflows based on smart contracts. Kinexys comes with similar features, but provides broader functionalities, including support for other public and permissioned networks. It also has a wider user base that includes Mastercard (NASDAQ: MA), the Qatar National Bank, Siemens, and B2C2.
The new framework is expected to solve one of the emerging challenges facing DLT platforms: a lack of interoperability. While decentralized technologies were intended to eliminate the private silos, major players have deployed their own networks, which are limited to their ecosystems, resulting in the same challenge that limited Web2 platforms.
Currently under development, the framework will establish a value highway between the clients of DBS and JPMorgan, the largest lenders in Southeast Asia and the United States, respectively.
Clients of both banks will pay each other in tokenized deposits in real time. A JPMorgan user, for instance, can pay a DBS client in JPM deposit tokens, and the recipient can choose to either receive it as a DBS token or the equivalent value in fiat. This transfer will unify the tokenized deposits of both banks, making the tokens fungible.
“As the digital asset ecosystem continues to grow, interoperability remains a critical piece in reducing fragmentation and ensuring that the full value of tokenised money can be transferred safely across borders,” commented Rachel Chew, the chief operating officer at DBS.
She described the new framework as a “significant milestone for cross-border money movement.”
Naveen Mallela, who heads Kinexys, says the collaboration proves that financial institutions can work together to unlock the benefits of tokenization while protecting the singleness of money.
The partnership comes amid an explosion in tokenization in the financial industry. A Nov. 11 report by IOSCO revealed that most large financial institutions globally are interested in tokenizing deposits, with a sizable number already experimenting with the technology. A separate study from the Bank for International Settlements found that a third of surveyed jurisdictions were working on a tokenization pilot.
Regulators are jumping on board, with the Monetary Authority of Singapore (MAS) announcing this week that it’s trialing tokenized bills, which will be settled via its wholesale central bank digital currency (CBDC).
SoFi launches ‘crypto’ trading
Elsewhere, American personal finance company SoFi (NASDAQ: SOFI) has launched a new platform allowing users to purchase, hold and sell digital assets.
Known as SoFi Crypto, it’s designed for investors new to digital assets and will be rolled out in phases over the coming weeks. It supports dozens of digital assets, with SoFi pledging “institutional-level security” for retail traders.
“Today marks a pivotal moment when banking meets crypto in one app, on a trusted platform, and driven by our core mission to help our members get their money right,” commented Anthony Noto, the SoFi CEO.
“I believe blockchain technology will fundamentally change EVERY way finance is done throughout the world by making money movement faster, cheaper and safer, while opening new ways for people to borrow better, invest better, spend and save better.”
Noto added that the new offering makes SoFi the only nationally chartered bank to offer digital asset services to consumers.
SoFi first ventured into the ‘crypto’ game in 2019, partnering with Coinbase (NASDAQ: COIN) to enable users to easily buy and sell digital assets on their platform. However, in late 2023, it exited the sector, migrating its ‘crypto’ clients to Blockchain.com. The exit, which came a year after it received its banking charter, was in response to increased regulatory crackdown under the Biden administration.
However, since Donald Trump took over, the U.S. government has warmed up to digital assets, and SoFi is now seeking to recapture the market share it ceded two years ago.
Watch: Richard Baker on engineering a smarter financial world with blockchain
Source: https://coingeek.com/dbs-bank-jpmorgan-to-roll-out-interbank-tokenized-deposit-transfers/