Financial institutions have long shown interest in public blockchain networks, yet meaningful adoption remains constrained by a familiar set of challenges. Two questions sit at the center: how can institutions capture the infrastructural benefits of public blockchains at scale, and is there a workable middle ground where institutional requirements can be met without degrading the system properties that make these networks so compelling?

The Massachusetts Institute of Technology Digital Currency Initiative (MIT DCI) and Kinexys by J.P. Morgan, the firm’s industry-leading blockchain business unit and part of J.P. Morgan Payments, have published a discussion paper that provides an initial list of 150+ institutional requirements for public blockchain use by financial institutions. The paper draws from Kinexys’ experience running centralized settlement systems, operating a private permissioned blockchain, and deploying token products on public blockchains. The paper analyzes where institutional needs are likely to introduce tension with the characteristics of public blockchains and calls on the industry to come together to align on the requirements, priorities and acceptable adjustments needed for institutional use at scale.

The discussion paper highlights the benefits of open blockchains for institutions. These include shared infrastructure that no single competitor controls, access to a wider pool of counterparties, assets and liquidity through network effects, and resilience to the failure of any single party. While for regulators, open blockchains can provide a shared, verifiable record of holdings and transactions, they can also provide a clearer view of market activity while supporting audit and supervisory access.

However, the price of institutional requirements has often resulted in the reintroduction of a central operator, which can diminish the benefits of public, decentralized blockchain networks.

Wee Kee Toh, Global Head of Kinexys Insights at Kinexys by J.P. Morgan, said, “We are pleased to co-author this discussion paper with MIT DCI and look forward to positive discussions with the industry at large. As adoption of open blockchains by financial institutions scales, there is a real need for the industry to convene on what the ideal institutional open blockchain looks like. This will undoubtedly require finding some common ground. If all institutional requirements were accommodated at once, blockchain networks would resemble traditional centralized systems; an untenable prospect for those who chose blockchains precisely because they differ from centralized, siloed systems. The optimal answer may depend on the specific use cases financial institutions pursue.”

Key institutional considerations for open blockchain networks include:

• Compliance with anti-money laundering laws and sanctions: Financial institutions must know exactly which parties are involved in a transaction and their regulatory status. Strong controls and permissioning are required to avoid scenarios where gas fees are paid to sanctioned entities or unsolicited tokens are received from sanctioned parties.
• Network accountability: Institutions need an accountable party, such as an operator or governance body, that can enforce rules to support regulatory compliance, uphold service level agreements, manage network participation and direct the evolution of the network over time, while remaining credibly neutral.
• Privacy and confidentiality of clients’ positions: Transaction flows, positions and counterparties must remain visible only to authorized parties such as the financial institution and its clients, while the ledger as a whole remains publicly verifiable to maintain trust among participants.
• Interoperability across the web3 and traditional financial ecosystems: Any blockchain network must connect to the broader onchain ecosystem and ideally the traditional financial ecosystem to reduce friction and enhance network effects, rather than operate in isolation.

In 2024, 2025 and 2026, MIT DCI and Kinexys by J.P. Morgan co-published three whitepapers exploring programmability in payments, token standards for tokenized payment products, and the barriers to public blockchain adoption, respectively. Together, these reports form part of an ongoing research effort to advance the development of scalable, secure, and interoperable blockchain-based financial infrastructure. Toh will join MIT DCI and other financial institutions, central banks and regulators for roundtable discussions at Insights 2040 Annual Meetings later this month to discuss the institutional non-negotiables and goals for the ideal institutional open blockchain.

Read the 2026 MIT DCI and Kinexys by J.P. Morgan co-authored discussion paper here.  For a primer on key terms and concepts in the blockchain and digital assets space, check out our Blockchain 101 glossary here.