FX Needs More Settlement Venues – JP Morgan

JP Morgan’s CEO Jamie Dimon was a vocal FUDster* for several years before embracing blockchain technology in the form of tokenisation. His personal views have not held the bank back, however, and JP Morgan became one of the earliest banks into the digital asset space, experimenting with onchain repo as early as December 2021. A few months later, the platform, now called Kynexis, was processing as much as $300 billion in intraday repo transactions, as other banks like BNP Paribas joined.

Fast forward to 2026 and banks are all over digital assets, with stablecoins and the tokenisation of financial assets poised to revolutionise collateral movement and enable 24/7 trading. That’s the theory at least. For JP Morgan, a lot of it is already a reality.

Kinexys by J.P. Morgan, the bank’s blockchain business unit, has been winning some large clients in the past six months, not least among Germany’s corporate sector, with Siemens and BMW both signing up for onchain FX payment services. B2C2, a large crypto market maker, has also engaged the US bank’s services.

This means that at a time when other banks are rushing to engage with the previously ridiculed space, JPM is already scaling its product with actual customers. “We are one of the earliest and largest service providers for onchain cash solutions,” Akshika Gupta global head of client solutions for Kinexys Digital Payments tells The Full FX. “We were the first to put deposits onchain and we currently have five currencies, the dollar, the euro, sterling, the renminbi and the Hong Kong dollar live,”.

For FX’ Sake

The great global pivot around digital assets arrived with the Trump administration in the US prompting a major shift in regulatory attitudes and the end of legislation by enforcement. The passage of the Genius Act, which sets rules for stablecoins, and a blanket ban on central bank digital currencies in the US had wide-ranging consequences around the world: digital tokens pegged 1:1 to a fiat currency (in 99% of the cases, the dollar) have gained ground in cross-border payments rapidly. Totalling just $3.3 billion in 2018, stablecoins overtook Visa and Mastercard in 2025 in volumes with $33 trillion-worth of transactions processed using the digital tokens.

Leaders on Wall Street have declared tokenisation the ‘Next Big Thing’ in financial markets and as usual, FX is leading the way with stablecoins, which are ultimately tokenised cash. Recently, tokenisation has gained momentum in other asset classes too: Treasuries, commodities and private equity have all started on the same path, with nearly $25 billion of assets sitting on blockchains as of February 2026.

But while stablecoins have proliferated in cross-border payments, the FX leg of these transactions hasn’t disappeared. Stablecoins payments today take the form of so-called stablecoin sandwiches, where party A pays their local currency to buy digital dollars, sends this to party B, who receives dollars but has to “off-ramp” these stablecoins into their local fiat unit.

While the stablecoin method is faster, it’s not necessarily cheaper, as the FX leg still has to take place (not to mention that some clever clogs have already figured out how to front run stablecoin sandwiches). So why are corporates and B2C2 rushing to sign up?

Giving clients the capability to automate rules and change them when they need to is hugely valuable for corporations

The answer is settlement, which opens up better and more efficient liquidity management avenues. This is especially useful for corporates and market makers like B2C2, who need faster and more secure liquidity management in the digital assets’ ecosystem.

“What we are doing by offering onchain settlement is the ability to have fungible dollar deposits with the euro, sterling, renminbi and the HK dollar 24/7,” Gupta explains. The bank went live with this service at the end of 2024, gradually increasing visibility over the course of last year.

By using blockchain rails, JPM can offer same-day settlement around the clock, without cut off times. This means that a market maker like B2C2 can access FX liquidity over the weekend, when crypto markets are open but currencies aren’t.

“We are the first in the industry to have the ability to swap dollars for the euro in under 2 minutes 24/7. It’s not magic, it’s just getting smart about reducing systems-based limitations, and it means that clients can have enough liquidity at any given time in any of the five currencies,” Gupta adds.

Both Siemens and BMW have completed near-instant dollar to euro cross-border payments through the Kynexis Digital Payments platform, making liquidity management more efficient by avoiding local currencies stuck in separate jurisdictions until banks open again. BMW, meanwhile, is deploying programmable payments to support its international treasury management operations. The first transaction involved carrying out automated balance checks, conditional auto-deposits, near real-time FX transactions and finally the transfers between BMW Group’s Blockchain Deposit Accounts in Frankfurt and New York.

The Future is…Crypto?

Whilst all of this is in the realm of foreign exchange, the onchain payments process doesn’t involve a new way of actually pricing currencies. Today around 99% of the roughly $300 billion stablecoin universe is pegged to the dollar and the number of liquidity providers who are willing to price the FX leg when on- and off-ramping transactions is limited. With Kynexis, JPM uses the same channels, technology and methodology to price the exchange rate at which the onchain FX deals get settled as normal.

“We are not really clear on how the FX leg of stablecoin payments can be more efficient than the current set-up of interbank markets,” Gupta says. “There is only a narrow set of liquidity providers for on- and off-ramping dollar-denominated stablecoins and interbank FX markets are generally speaking quite efficient with tight spreads and deep liquidity.”

There is a need for more settlement venues, a need for optionality…We think that bilateral venues will proliferate, complementary to CLS

For now; because the future of FX could well move towards automated market makers (AMMs) and decentralised exchanges (DEXs), according to Gupta. “We think the future of FX is that a lot of it, including the desk and the booking, will move onchain and towards AMMs. It’s a question mark but we see a world where you have liquidity pools with different currencies and the pool itself is executing FX transactions. FX could become a lot more like crypto in the future,” she says. “There are people who think spreads are not necessarily going to get tighter compared with OTC markets but we will see how the market evolves.”

Programmable FX = Operational Efficiency

FX is often viewed as the exhaust fume from other deals, spurring many asset managers and other market participants to search for simple, practical and hands-off solutions for managing exposures (this less price-sensitive cohort seems to make up the majority of the market, certainly when looking at studies around FX cost analysis). This means that other considerations are more important, which is where programmable payments and deliverable FX converge to a very large part.

Gupta says corporates like BMW can set rules for a plethora of factors: if dollar holdings go below a certain level, they get automatically topped up from a long euro account, for example. In other words, operational efficiency trumps FX prices. “It’s a shift in thinking” she explains. “Giving clients the capability to automate rules and change them when they need to is hugely valuable for someone like the Ant Group, for example, one of the world’s largest e-commerce companies. Having the ability to exchange dollars into their local currency without cut-offs is a great outcome from their perspective.

“All other banks on the street would give them the rate, but the settlement won’t happen until two days later. Kynexis is a game-changer for them,” Gupta adds.

And as FX prices become even less prominent in corporate thinking, the move towards AMMs and a more crypto-like market structure seems even more likely.

Settling Risks

Settlement risk in FX has been climbing for years, with the BIS and others warning about “stubbornly high” risks, noting in 2022 that “$2.2 trillion worth of currency trades are exposed to settlement risk on any given day, potentially undermining financial stability.”

The overall effect of the safety net provided by CLS has waned over the years as emerging market units such as the renminbi became a larger portion of the global market, but were not supported by the FX industry’s main settlement mechanism. “There is a need for more settlement venues, a need for optionality,” Gupta suggests. “After the move to T+1 an asset manager in Japan buying US equities has to pre-fund dollars because of cut-off times at CLS and banks.

“We think that bilateral venues will proliferate, complementary to CLS,” she continues. “There are different views on the cost of net vs gross settlement from a liquidity point of view, but one thing is for certain: competition is always good. CLS has been on its own for a very long time.”

To be fair to CLS, JPM is providing five currencies at this point for onchain settlement, four of which are included in the CLS universe – but the renminbi is already a valuable move forward and other currencies are coming soon.

For now, FX markets haven’t changed much, but nothing stays the same forever.

*FUDster: fear, uncertainty and doubt is a crypto expression for those who don’t buy into the magic of blockchain