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Good morning. Many of the world’s largest banks are actively developing and piloting blockchain projects, and JPMorgan Chase has made a big move.
For years, JPMorgan has quietly built its own blockchain technology, opting for a “walled garden” approach by creating a private network accessible only to its customers. But, as my Fortune colleague Ben Weiss reports, JPMorgan is now venturing beyond those walls. On Wednesday, the bank announced it settled a transaction on a public blockchain, partnering with crypto firms Chainlink and Ondo Finance to make it happen.
“In early May, JPMorgan’s blockchain division, Kinexys, transferred money between two accounts on its private blockchain to settle the purchase of tokenized treasuries on Ondo’s public ledger,” Weiss writes. “Tokenized treasuries are money market funds that live on the blockchain. To trigger the payment, JPMorgan used Chainlink, a communication protocol that lets blockchains process outside information.” For the first time, JPMorgan has built out a structure to interface with a public blockchain. “This is not just another POC [proof of concept],” Sergey Nazarov, cofounder of Chainlink, told Weiss. “This is the beginning of something big.” You can read the complete article here.
Under President Trump’s crypto-friendly administration, which is expected to take a lighter regulatory approach, banks recognize the cryptocurrency market is no longer a niche. Lawmakers are now seeking to pass legislation on stablecoins. So-called stablecoins are digital assets like Bitcoin, but are backed by the U.S. dollar, making them akin to a money market fund with check access or a bank account. Bank of America CEO Brian Moynihan recently said in an interview that if stablecoins become legal, “we will go into that business.”
Big banks face competitive pressure from fintechs and crypto-native firms, making engagement with crypto and blockchain a logical step for future relevance and growth. Alesia Haas, CFO at Coinbase, which is one of the largest centralized crypto exchanges in the U.S., recently said that regulatory clarity will “unlock” innovation, banking relationships, and new capital inflows.
Before joining Coinbase, Haas worked in asset management as a CFO and held senior roles at Merrill Lynch and General Electric. I recall a conversation I had with Haas last year, when I asked her what attracted her to Coinbase.
“When I learned about blockchain, I could see that if you tokenize real-world assets, and send value peer to peer, that was going to create a more inclusive, faster, and cheaper financial system,” she said. “And that was such an exciting thing to be a part of.”