How J.P. Morgan’s blockchain platform can help real estate organizations

Kinexys by J.P. Morgan, the firm’s blockchain platform, offers speed, programmability and other benefits for commercial real estate organizations through its four blockchain-based networks.

“What these networks have in common is our technological roots in building distributed ledgers and computing platforms that build off of blockchain technology,” said Zack Chestnut, Head of Business Development for Kinexys Digital Payments. “But they all are built for different reasons.”

1. Kinexys Liink

Kinexys Liink is an information exchange network for payment-related data sharing between institutions. “The reason why blockchain is so powerful in this case is because it allows us to gain access to information without moving where the data resides,” Chestnut said.

This blockchain network can help real estate via several applications, including Confirm, which works to validate account numbers and information.

For example, if a U.S.-based real estate company wanted to send a large wire payment to a company named Indonesian Property Developers Inc., the U.S. company could add that overseas organization’s name and account number to Confirm. 

“Confirm would then verify the account is open and owned by Indonesian Property Developers Inc.,” Chestnut said. “You have the comfort of knowing that when you send your wire payment, it’s going to the right party with almost 100% certainty.”

2. Kinexys Digital Payments

Kinexys Digital Payments is designed to instantly transfer and clear multibank, multicurrency assets on a permissioned distributed ledger. 

Using this blockchain application in commercial real estate boasts many benefits, but two stand out:

• Speed: “Blockchain provides an always-on system that can move money 24 hours a day in near real time, including across borders and in high amounts,” Chestnut said. “It's simply a faster settlement experience than what’s available with other payment rails and account structures today.”
• Programmability: “Once you put several accounts onto the blockchain, you can make use of related functionality to program the accounts and make them smarter,” Chestnut said. “Specifically, it means there's a way to attach if-then logic to bank accounts.”

3. Kinexys Digital Assets

Kinexys Digital Assets tokenizes traditional assets on blockchain to make them more portable, divisible and liquid. Tokenization may help reduce administrative costs for cash flow-generating assets like commercial real estate by enabling shared, at-the-source reporting and automating income distribution. Tokenization can also help streamline transactions, enhance transparency, increase the speed of settlements and simplify asset provenance tracking. 

Consider a fund managing a portfolio of industrial, retail, multifamily and mixed-use buildings. Fund shares and the underlying property portfolios may be tokenized. Fund tokens would represent an investor's stake in the entire portfolio, while property tokens could track individual asset performance. 

Likewise, during the rent collection process, smart contracts could automatically calculate and distribute income to fund token holders, reflecting proportional ownership. 

“This structure has the potential to provide investors with efficient, timely income flows, real-time asset-level transparency on cash receipts and opportunities for greater customization across their entire real estate investment portfolio,” said Keerthi Moudgal, head of Product at Kinexys Digital Assets.

“Tokenization lays the groundwork for more efficient administration of assets, which is a precursor to creating truly liquid alternatives or marketplaces for real estate,” Moudgal said.

4. Kinexys Labs

Kinexys Labs is a group within the firm that works to stay ahead of the curve on blockchain developments. The team works to develop and commercialize new, blockchain-based methods to address commercial real estate business challenges, identify upcoming technology trends and grow a deeper understanding of Web3 innovation. 

“The team’s work in digital identity is laying the future foundation to store, view and share digital assets through enhanced digital identity ownership and verification processes, all in one place,” said Alexandra Prager, head of Kinexys Labs. “The team is continually assessing and developing Web3 products to further the digital asset ecosystem at large.” 

For example, using blockchain to underpin real asset ecosystems, including real estate, could lead to composable, re-purposable identities, novel access/safekeeping mechanisms and the ability to connect disparate physical infrastructure components by creating decentralized physical infrastructure networks. 

In the coming years, blockchain has the potential to transform property management, investments and loans across commercial real estate.