As the financial services ecosystem continues to advance the use of blockchain and tokenization, the question of standards – the accepted rules and principles that govern financial activities and operations – comes up time and again. The Massachusetts Institute of Technology Digital Currency Initiative (MIT DCI) and Kinexys by J.P. Morgan, the firm’s blockchain business unit, have published a whitepaper that explores existing token designs and considers whether new standards could drive greater safety and integrity while ensuring payment tokens can be used seamlessly between financial institutions.

The whitepaper highlights the additional capabilities needed to meet existing regulatory requirements, identifying gaps in existing token standards and proposing two new sets of capabilities to address them. The research also presents the industry with a potential blueprint for tangibly moving forward with broad, cohesive tokenization.

“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, Ph.D., Director of the MIT Digital Currency Initiative. “This research helps to advance the goal to build a digital asset ecosystem that ensures greater efficiency, safety, privacy, and interoperability across all financial sectors.”

Key highlights include:

• A financial institution’s handbook for developing payment tokens: The report provides a set of design guidelines and key functionalities that can be referred to as financial institutions develop payment tokens and other token-based products. The mapping of token standards to functionalities can act as a blueprint for designing a payment token. 
• Recommended industry standards, which should be narrow and composable: Broad industry standards can require time- and resource-intensive initiatives to implement. The research suggests various standards should be adopted for different parts or components, allowing faster implementation while still prioritising the safety and integrity of the financial system.
• Future considerations for development: There are opportunities to even better manage risk in a tokenized environment, enabling changes in payment processing and how payment controls are applied to fully harness benefits.

“We are pleased to co-author a second report with MIT DCI, focused on the essential steps to design tokenized payments products that prioritize safety, integrity and usability,” said Wee Kee Toh, Global Head of Business Architecture for Kinexys Digital Payments at Kinexys by J.P. Morgan. “There is a real need for collaboration across the financial ecosystem to establish standards that enable innovative tokenized products to enter the market while ensuring they meet the safety and integrity requirements of both today and the future.”

In 2024, MIT DCI and Kinexys by J.P. Morgan co-published their first whitepaper which explored practical use cases in how to bring programmability into payments transactions, available here. The findings showcased how programmability in payments can help move banking and payments processing forward.

Read the 2025 whitepaper here and check out recent Kinexys news in Ledger Insights and here.