JPMorgan, an investment bank, has declared that it is initiating a test of blockchain technology to provide U.S. dollar-based settlement services for various renowned financial institutions within India.
JPMorgan’s Blockchain Approach
Recent reports indicate that JPMorgan’s blockchain experiment is to be restricted to banks situated in India’s GIFT City, a free trade zone that competes with other international financial centers such as Abu Dhabi Global Market (ADGM). This pilot program allows participating banks to open Nostro accounts on-chain, facilitating the execution of dollar payments.
JPMorgan has leveraged blockchain technology to provide significantly faster settlement times and 24/7 transaction availability, in stark contrast to the traditional Indian banking payment system that was limited to U.S. open hours and did not permit weekend transactions via the SWIFT network.
Having said that, JPMorgan’s suggestion of utilizing blockchain-based accounts is not at all a brand new idea; TassatPay, based in the U.S., had already proposed quite a similar solution for their users. Furthermore, Signature Bank, in the midst of controversy, has also adopted blockchain technology to enable 24/7 payments to its patrons, and due to its efficiency, specialists are predicting that it will be widely adopted in the near future.
India is making efforts to upgrade GIFT City, in order to make it more competitive with other international free trade zones. Experiments also are being conducted as part of this endeavor. GIFT City enjoys quasi-foreign status, which makes it exempt from many Indian regulations, resulting in the presence of several global organizations, such as MUFG and even the Deutsche Bank.
India’s Ambitions towards Blockchain
India is progressing toward full-scale blockchain adoption, and JPMorgan’s project could be a significant contributor to this mission. Finance Minister Nirmala Sitharaman has announced that the country is targeting a 46% adoption rate of blockchain technology, making it a primary focus of its technological ambitions.
NITI Aayog, keeping in line with the government’s policy, has recently launched a blockchain learning module to increase the talent base for international digital currency companies looking to set up in India. This module is designed to equip professionals with the necessary skills and knowledge to efficiently create and maintain blockchain solutions.