From friction to flow: How public and private chains are fueling the new financial physics

For years, institutional blockchain strategy has been framed as a choice: private chains for controlled internal operations or public chains for open markets and new counterparties. That framing doesn’t capture the full picture.

The real value lies in deploying both strategically, using each to solve specific pain points that neither chain type addresses alone.

Kinexys by J.P. Morgan is built for exactly that: enterprise blockchain infrastructure that supports both private and public networks, purpose-built for the security and compliance demands of regulated global finance. With more than $3 trillion in transaction volume processed since inception¹—and with both cash and asset legs on-chain—Kinexys brings production-scale experience to both sides of the multichain strategy.

The friction in most treasury operations doesn’t overtly appear on a balance sheet, but it can result in costs that compound daily.

Consider a multinational corporation managing liquidity across six regional offices. Each location is prefunded separately. Capital sits in those accounts, unavailable for redeployment, until a one- to three-day transfer cycle completes. Treasury teams spend hours checking account statuses, chasing ACH confirmations and reconciling across time zones. That operational drag is a direct cost to working capital efficiency.

Private blockchain-based functionality replaces that cycle with programmable, cross-border payments. Liquidity moves across borders and currencies in minutes, directed programmatically to where it’s needed within a network of known counterparties. What previously required manual reconciliation across time zones becomes straight-through processing with same-day settlement. Operational overhead for forecasting and prefunding requirements both shrink, particularly ahead of weekends and currency holidays, and treasury teams shift from chasing confirmations to actively optimizing capital allocation.

Blockchain Deposit Accounts bring this to life. A multinational group that previously waited multiple days for a funds movement to complete to reposition capital across entities can now reposition capital in near real time, funding supplier payments, payroll and cross-border settlements without waiting for traditional transfer cycles to clear. Since launch, Blockchain Deposit Accounts have processed cross-entity transfers across five continents, giving treasury teams continuous visibility and control over global liquidity positions.

For many institutions, private blockchain is where the journey begins. It delivers new functionality, including treasury automation and faster certainty of payment finality, without introducing new counterparty risk or requiring changes to existing digital asset custody workflows. As more participants join the private network, each new member expands the range of counterparties reachable through a single infrastructure layer.

For asset managers and issuers, public chains unlock unique capabilities with significant scaling potential. These include broader distribution across new investor pools and continuous settlement that operates outside banking hours, which is supported by programmable compliance embedded at the smart contract level.

Kinexys is already putting this into practice. Technology deployed by Kinexys can support the tokenization and lifecycle of money market funds on Ethereum and potentially other public chains: liquid, yield-bearing real-world assets (RWA) that move continuously and embed business controls directly into the smart contract layer, such as transfer restrictions effected through allowlisting. Dividend payments that once required manual coordination can be enabled to execute automatically through on-chain logic.

For issuers, this opens a rapidly growing on-chain distribution channel and the ability to build sophisticated investment products through tokenization. Native public chain participants gain access to enterprise-grade investment products within the ecosystems where they already operate.

The speed of adoption is creating urgency. More than $29 billion in tokenized RWA is live on public blockchains today, and that figure continues to scale by more than 200% year over year.² However, scale alone doesn’t solve the institutional trust challenge.

Capturing that opportunity requires an instrument built to institutional standards. As more tokenized assets move onto public blockchains, institutions need a way to settle on-chain without compromising the standards they expect from traditional settlement. Today, most on-chain settlement requiring a payment leg relies on stablecoins. For a treasurer, that raises real questions: what credit risk am I taking on, how does this sit on my balance sheet and does this instrument meet the compliance and regulatory standards my organization requires?

Deposit tokens are built to answer those questions. JPM Coin is a USD-denominated deposit token issued on Base, Coinbase’s public blockchain network, with plans to extend to the Canton Network. It carries the credit risk profile and balance sheet certainty of money on deposit with J.P. Morgan, and benefits from the existing regulatory deposit framework. Also, JPM Coin transfers are subject to transaction monitoring and screening requirements that apply across J.P. Morgan. It can be used for rapid, near real time settlement of transactions, around the clock.

Deposit tokens can be used as a compatible cash leg with applications that orchestrate atomic swap transactions, such as delivery versus payment (DvP) in a capital markets context, where asset transfers and payments, or payment versus payment in an FX context, executing only when both sides of the transaction are fulfilled. What makes this distinctive is that institutions can now access these benefits through a bank-created product. For on-chain lending or margin, deposit tokens, like JPM Coin, can serve as collateral, giving counterparties confidence that is not available with other on-chain instruments today.

Consider a practical example. A client holding funds in their Blockchain Deposit Accounts at J.P. Morgan decides to invest in a tokenized real-world asset on a public blockchain. Rather than initiating a multiday transfer process involving wires and intermediaries, they convert those funds into JPM Coin on the public chain in near real time, even on weekends. The nature of the funds doesn’t change. It’s the same deposit in a different format. From there, the client executes an atomic DvP, settling the asset purchase simultaneously without taking on additional exposure beyond their existing deposit position. What previously required multiple steps, intermediaries, cut-off times and days of settlement risk becomes a single transaction.

Because JPM Coin is fully integrated with J.P. Morgan’s traditional banking infrastructure, clients move easily between on-chain and off-chain environments without creating liquidity silos or relying on cumbersome forecasting or prefunding to interact with tokenized real-world assets on chain. Now, JPM Coin allows institutions to bring a deposit position with a regulated bank on-chain, enabling allocation, treasury management and settlement without having to operate in two separate and unconnected liquidity ecosystems.

Private and public chains solve distinct problems, and their value compounds when they share a common infrastructure layer, providing pathways with reduced friction for money movement between the two.

On public chains, institutions can settle payments in near real time using deposit tokens, extending treasury operations beyond banking hours and traditional correspondent networks. On private chains, programmable liquidity flows replace manual transfer cycles, giving treasury teams continuous control over cross-border capital without continuous manual oversight. When both connect to traditional payment rails, capital moves across all three environments without friction.

On the asset side, public chains enable issuers to tokenize and distribute investment products to new investor pools with the ability to embed business logic at the contract level. Private chains provide the governed environment to manage those assets across known counterparties. Together, they create a powerful infrastructure that can serve a wide range of treasury and capital markets needs. The use of programmability further connects financial infrastructure to business processes directly. Payments are triggered automatically when goods are delivered. Settlement coordinates in near real time across asset classes. Capital flows continuously rather than waiting for batch cycles to clear. This is the logical extension and convergence of public and private blockchain infrastructure that is already in production.

The organizations incorporating these tools now are not making a speculative bet. They’re deploying tested infrastructure against common capital efficiency problems.

When it comes to capital efficiency, the limitations of infrastructure have long been a constraining factor, and that infrastructure has been rebuilt.

To learn how Kinexys can help your institution optimize blockchain treasury management, access public blockchain markets and move value across chains, connect with a Kinexys specialist or visit our solutions page.