Solving the 900 billion pain point: JPMorgan Chase uses blockchain to achieve cash-versus-dealer settlement

Source: Blockchain Knight

JPMorgan has partnered with Ondo Finance and Chainlink to complete a groundbreaking pilot transaction that bridges traditional finance and blockchain.

The banking giant’s blockchain division Kinexys successfully executed a cross-chain atomic settlement using Ondo Finance’s tokenized short-term U.S. Treasury product OUSG, according to a May 14 announcement.

This is the first time Kinexys has connected its permissioned blockchain network with a public Layer1 chain through Chainlink’s interoperability infrastructure.

Nelli Zaltsman, head of settlement solutions at Kinexys, said the move reflects JPMorgan’s evolving support for institutional clients as they engage with new digital infrastructures.

The executive added: “By securely and thoughtfully connecting our institutional payments solutions to external public and private blockchain infrastructures seamlessly, we can provide broader benefits and scalable trade settlement solutions to our clients and the wider financial ecosystem.”

The milestone test transaction was conducted on the testnet of Ondo Chain, Ondo’s purpose-built blockchain for the tokenization of real-world assets. It uses a delivery-versus-payment (DvP) model, which allows assets and payments to be transferred simultaneously to reduce settlement risk.

Traditional DvP transactions often face delays due to fragmented systems and manual processes associated with legacy systems. Industry estimates suggest these inefficiencies have cost market participants more than $900 billion over the past decade.

In cross-border transactions, the complexity is multiplied, as different regulations, currencies and jurisdictions introduce additional friction.

Using blockchain technology, Kinexys and its partners demonstrated a real-time settlement process that reduces manual intervention, reduces counterparty risk, and improves liquidity. Chainlink provides a messaging framework that operates synchronously across two blockchain networks.

Kinexys relies on blockchain-based deposit accounts to complete the payment side of the transaction, while Chainlink ensures data consistency between the permissioned chain and the public chain. This reduces operational friction and achieves final confirmation of transactions within seconds.

Chainlink co-founder Sergey Nazarov called the pilot a milestone in connecting traditional finance and decentralized finance. He pointed out that global financial institutions now recognize that to enter new markets, they need to securely access public blockchains and have powerful cross-chain tools.