JPMorgan, Chainlink and Ondo Finance test cross-chain settlement of tokenized treasury fund

JPMorgan's blockchain unit Kinexys, Chainlink, and Ondo Finance have completed a test transaction that settled a tokenized U.S. Treasuries fund across a public and a permissioned blockchain network. The trial showed how different blockchain systems can work together to move real-world assets.

The transaction took place on the test network of Ondo Chain — a new blockchain built by Ondo Finance for tokenizing real-world assets — and used a method called "Delivery versus Payment," or DvP. In this setup, the asset and payment move simultaneously, reducing the risk that one side fails to deliver. The asset being settled was OUSG, a tokenized short-term U.S. Treasuries fund issued by Ondo Finance. The payment side used blockchain deposit accounts on JPMorgan's permissioned Kinexys Digital Payments network, with Chainlink providing the infrastructure to securely coordinate the process across both systems.

"DvP transactions are difficult to execute in traditional finance due to fragmented systems and manual workflows, leading to costly settlement delays and increased counterparty risk," the firms said. "In just the past decade, it is estimated that payment and settlement failures have cost market participants at least $914 billion. DvP issues are further compounded in cross-border transactions by complex regulatory, geographical, and currency limitations."

Tokenization of real-world assets has been gaining traction as institutions look for ways to modernize finance. Proponents say it can make markets more efficient by speeding up settlement, reducing costs, and increasing transparency through blockchain-based records.

JPMorgan's Kinexys platform, for instance, has processed over $1.5 trillion in total transaction volume since its launch in 2019. Average daily volume now exceeds $2 billion, with year-over-year payments volume growing tenfold, according to the bank. Still, the platform represents only a fraction of the roughly $10 trillion in daily transactions handled by the bank's broader payments division.

Sergey Nazarov, co-founder of Chainlink, said the test transaction reflects growing interest from institutions in engaging with public blockchain ecosystems in ways that meet security and compliance standards.

"It is becoming increasingly clear to the world's institutions that they have a large addressable market in the public chain community and that they need a reliable set of technical standards and cross-chain connection capabilities to successfully transact in this new world," he said.

This debut transaction on Ondo Chain's testnet "isn't just a major milestone, it's a statement about the future of finance," said Nathan Allman, CEO of Ondo Finance.

The three firms said the successful test lays the groundwork for more advanced DvP transactions and future use cases.