JP Morgan recently rebranded its blockchain division, Onyx, as Kinexys, marking a pivotal shift in approach to digital assets, from exploratory projects to scalable, real-world applications. Toh Wee Kee, global head of business architecture for coin systems at Kinexys, plays a crucial role in shaping the firm's digital payment and asset tokenisation strategies. With the support of industry-wide initiatives like Singapore’s Monetary Authority (MAS) Global Layer One (GL1), Kinexys aims to build an integrated financial ecosystem, leveraging blockchain technology to enhance transparency, efficiency, and regulatory compliance.

A new era in blockchain

The rebranding of Onyx to Kinexys is more than a name change; it represents a significant shift in JP Morgan’s blockchain strategy. According to Toh, the previous brand, Onyx, symbolised an era of blockchain exploration, characterised by experimenting and proving technical concepts and validating business value. Having exceeded average daily transaction values of  $2 billion, the focus is now on scaling practical application that caters to real-world demands in financial markets.

However, with Kinexys, the focus has shifted to practical, scalable applications that respond to real-world demands in financial markets. For instance, Kinexys plans to introduce on-chain foreign exchange (FX) settlements, starting with the US dollar and euro, by the first quarter of 2025. This initiative aims to reduce FX settlement risks and expedite trade settlements. By enabling on-chain FX settlements, the bank seeks to also provide clients with faster and more secure cross-border transactions, thereby improving overall efficiency in foreign exchange markets

The rebranding aligns with JP Morgan's commitment to a kinetic future for blockchain, where “connection” and “movement” are central themes. Kinexys aims to enable seamless movement of digital currencies and assets across borders, connecting networks and institutions for seamless financial interactions. This identity shift reflects the industry’s broader evolution from blockchain experimentation to the commercialisation of tokenised assets and services, a shift supported by MAS’s recent backing through the Guardian Wholesale Network (GWN) and GL 1 projects. These initiatives, according to Toh,  drive towards regulatory and technological framework necessary for tokenisation on a global scale.

Scaling asset tokenisation and DLT

Scaling DLT is no small feat, even for a global financial institution like JP Morgan. Toh noted the complexity of ensuring compliance across jurisdictions, particularly when it comes to the usage of digital currencies and assets globally, which face different regulatory frameworks worldwide. While jurisdictions like Singapore provide a relatively open regulatory environment, other regions maintain stricter controls, resulting in higher compliance effort for cross-border operations.

Moreover, Toh highlighted the limitations of using public blockchains for institutional purposes. Public networks are designed to be decentralised, raising concerns around governance and accountability. Instead, Kinexys is collaborating with other financial institutions on initiatives like the GL1 network, a blockchain that is intended to be governed and operated by financial institutions for the financial industry. This approach allows institutions to leverage the openness and interoperability of blockchain while adhering to necessary governance and regulatory standards.

Building an interconnected ecosystem

Toh emphasised that one aspect of Kinexys’s strategy is fostering network effects within the financial ecosystem. By connecting banks and other institutions through DLT, Kinexys can drive efficiency and reduce transactional friction. An example of this is the digital securities ecosystem, where the increased usage of digital securities increases payment and settlement opportunities, enhancing the value for all stakeholders involved in these transactions. This interconnected ecosystem, Toh explained, is not just a vision for JP Morgan but a collaborative goal shared with industry partners like MAS.

Real-world applications and the expansion of rebranded JPM Coin

JPM Coin rebranded as Kinexys Digital Payment, is JP Morgan’s flagship digital payment solution that represents one of the most successful implementations of blockchain in institutional finance. Since its launch, Kinexys Digital Payment has enabled secure, real-time transactions, processing over $1.5 trillion to date, and a daily transaction volume of about $2 billion. Designed for cross-border payments and treasury management, Kinexys Digital Payment has garnered significant interest from multinational corporations and financial institutions. The rebranding of JPM Coin under the Kinexys umbrella underscores its role as a critical component of JP Morgan's blockchain strategy, particularly as it scales to accommodate diverse currencies like the euro and US dollar.

Adoption and integration with new frameworks

Kinexys has streamlined client onboarding for Kinexys Digital Payment by offering application programming interface (API) connectivity, making integration as seamless as traditional banking solutions. This approach allows clients to connect their enterprise resource planning (ERP) or treasury management systems directly to Kinexys, integrating business and payment processes. As Toh explained, this integration goes beyond conventional payment triggers, embedding payments within business workflows for a more cohesive financial experience. The platform’s programmable features allow businesses to automate repetitive tasks, optimising their operational efficiency and reducing reliance on 24/7 human oversight.

Future opportunities and functionalities

Looking ahead, Kinexys aims to expand Kinexys Digital Payment’s functionalities to meet emerging client demands, particularly in trade finance and securities. Toh hinted at the potential to tokenise various asset classes beyond payments, such as tokenised payables and trade finance assets that could be used in onward financing, opening up additional revenue streams and investment opportunities. Furthermore, MAS’s GL 1 and GWN provide Kinexys with a foundation to develop and test these applications within a compliant, scalable infrastructure.

Expanding use cases in financial markets

Beyond payment solutions like Kinexys Digital Payment, digital assets are increasingly being utilised in various financial market applications, notably in repurchase agreements (repos). Repos are short-term borrowing mechanisms where securities are sold with an agreement to repurchase them at a later date. Traditionally, these transactions have been complex and resource-intensive, but the integration of DLT is streamlining the process.

By tokenising securities involved in repo transactions, financial institutions can achieve real-time settlement and enhanced transparency. For instance, Broadridge Financial Solutions, together with Kinexys, has developed a distributed ledger repo (DLR) platform that facilitates over $1 trillion in tokenised repo transactions monthly. This platform enables instant settlement and reduces the need for intermediaries, thereby lowering operational costs and risks associated with traditional repo markets.

The adoption of DLT in repo markets is gaining momentum, with several financial institutions exploring or implementing tokenised solutions. However, scaling these applications requires addressing challenges such as interoperability between different blockchain platforms and compliance with varying regulatory standards across jurisdictions. Collaborative efforts are crucial in establishing common frameworks and standards to facilitate broader adoption of tokenised repos and other digital asset applications in financial markets.

Vision for DLT in finance and the future of Kinexys

Kinexys’s trajectory reflects J.P. Morgan's long-term vision for DLT in financial services, where blockchain is not only a tool for efficiency but also a framework for global interoperability. Drawing on his experience when he was with MAS and the Bank for International Settlements (BIS), working on projects such as Ubin and Dunbar, Toh understands the importance of industry-wide collaboration. The GL1 exemplifies this approach by encouraging banks to build and share infrastructure that supports a broad range of financial applications, from payments to trade finance.

In a constantly changing landscape, Kinexys is committed to staying agile and responsive. Toh described Kinexys’s role as a contributor to industry-wide initiatives where banks operate on equal footing to ensure shared benefits. By focusing on industry collaboration and regulatory alignment, Kinexys aims to advance DLT applications without overextending any single institution’s role. This approach, Toh believes, will foster sustainable growth and innovation, ensuring that blockchain technology serves the evolving needs of the financial industry.

The road ahead

The rebranding of Onyx to Kinexys signals JP Morgan’s commitment to transforming blockchain from experimental technology to a fundamental element of financial services. It is driving the adoption of DLT and asset tokenisation through collaborative frameworks, with a focus on scalable, secure, and interoperable solutions. Kinexys is positioned to define the future of blockchain in finance and markets. As it continues to expand its capabilities and adapt to a complex regulatory landscape, it aims to make blockchain technology an integral part of global financial infrastructure, benefiting institutions, clients, and the industry as a whole.