Public Blockchains in Banking: Technology Risks and Token Design for Safety and Resilience

Public Blockchains in Banking: Technology Risks and Token Design for Safety and Resilience
Financial institutions exploring public blockchains must grapple with technology risks that go beyond governance: consensus vulnerabilities, validator concentration, custody failures, and migration challenges. This roundtable will examine how token design can embed safety, integrity, interoperability, and usability into blockchain-based payments. Drawing on the Global Blockchain Business Council’s risk mitigation framework and MIT DCI/J.P. Morgan’s latest research on payment token design, the discussion will identify concrete safeguards and operational practices that can make public blockchain adoption safe, resilient, and institution-ready.

The conversation will focus on concrete design and operational safeguards banks should demand when engaging with public blockchain-based assets.
- Safety and settlement assurance: How can token design embed safety features so banks can trust settlement?
- Integrity and governance resilience: What token-level governance or wrapper mechanisms can ensure integrity even when decentralised governance diverges from bank needs?
- Interoperability and portability: How should payment tokens be designed for cross-chain usability so banks can migrate if one chain becomes unusable?
- Usability and custody: How custody, key management and recovery differ across L1 and L2s, and how institutional wrappers can abstract complexity for banks.

Pre-read materials:
GBBC [systemic non-financial risks - governance, ops, tech, legal]:
https://assets.ctfassets.net/so75yocayyva/4Plcwx7j9lfGuLHUnvnFKW/864b0955a33ab1467d2971825f7273ae/Proposed_Risk_Mitigation_Framework_for_Non-Financial_Risks_of_Blockchain_Infrastructure.pdf

MIT DCI [design principles for payment tokens: safety, integrity, interoperability, usability] https://www.jpmorgan.com/kinexys/documents/designing-payment-tokens-for-safety-integrity-interoperability-usability.pdf

This session is Part 1 of a 2-part series on Public Blockchains in Banking. Read more about Part 2 of the discussion here