As financial institutions increasingly explore the use of public blockchains, a range of structural and operational challenges have come into focus. The Massachusetts Institute of Technology Digital Currency Initiative (MIT DCI) and Kinexys by J.P. Morgan, the firm’s industry-leading blockchain business unit, have published a whitepaper that analyzes these challenges and evaluates how they may be addressed through a combination of technical design, protocol evolution, and regulatory considerations.

The whitepaper highlights key challenges including transaction ordering risks, censorship concerns, receipt of unsolicited tokens, and exposure to sanctioned entities. While some controls can be implemented at the application and smart contract layers, the research shows that more comprehensive solutions often require changes at the blockchain protocol, network governance, or regulatory levels. The whitepaper also provides a structured framework for understanding where issues originate and how different aspects of the blockchain ecosystem can contribute to addressing them.

“At the MIT Digital Currency Initiative, we explore how innovations from decentralized networks could enable us to reimagine the existing financial infrastructure,” noted Dr. Neha Narula, Director of the MIT Digital Currency Initiative. “This research advances our understanding of the practical challenges financial institutions face when building on public blockchains, and the range of technical, governance, and regulatory ways those challenges might be addressed, while still preserving the openness and permissionless innovation that make these networks valuable.”

Key highlights of the whitepaper include:

• A structured framework for analyzing blockchain challenges: The report categorizes key issues faced by financial institutions and maps them across different layers of applications, smart contracts, token standards, blockchain networks, network governance, and regulation, helping stakeholders identify where solutions are most effective.
• Assessment of mitigation versus root-cause solutions: The research distinguishes between workaround solutions available to blockchain users and more fundamental solutions that address root causes throughout the ecosystem, offering a clearer path for long-term improvements.
• Implications for protocol design and ecosystem collaboration: The findings emphasize the importance of collaboration between financial institutions, protocol developers, and regulators to implement meaningful changes, particularly at the protocol and governance levels.
• Guidance for future development and experimentation: The whitepaper outlines opportunities for further research and technical experimentation, including proof-of-concept implementations to test potential solutions and inform future iterations of blockchain infrastructure.

Wee Kee Toh, Global Head of Insights at Kinexys by J.P. Morgan, said, “We are pleased to co-author a third report with MIT DCI, this time focused on the practical challenges financial institutions face when using public blockchains and how these challenges might be addressed. As adoption of public blockchains by financial institutions scales, there is a need for forward-looking research to anticipate and solve challenges. We look forward to furthering the conversation with other financial institutions, blockchain ecosystem players and regulators to tackle barriers and accelerate the implementation of new solutions.”

In 2024 and 2025, MIT DCI and Kinexys by J.P. Morgan co-published two whitepapers exploring programmability in payments and token standards for tokenized payment products, 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 industry leaders at a GFTN Insights working group during the Point Zero Forum later this month to share practical insights on building tokenization in finance.

Read the 2026 MIT DCI and Kinexys by J.P. Morgan co-published whitepaper here. For a primer on key terms and concepts in the blockchain and digital assets space, check out our Blockchain 101 glossary here. Dive deeper into Kinexys’ latest milestones here.