Kinexys by JP Morgan, the bank’s blockchain arm, and the Massachusetts Institute of Technology’s Digital Currency Initiative (MIT DCI) have collaborated on a paper to explore standards for bank tokens on open blockchains. The authors suggest primarily relying on existing Ethereum standards, but propose two new ones they believe are needed for interbank payments. They also suggest areas where regulations might be relaxed for blockchain-based bank payments. By open blockchains they mean permissionless blockchains and also open permissioned blockchains such as Unified Ledgers and Singapore’s Global Layer One. In the latter case, a key differentiating feature is the blockchain node operators are regulated. Part of the paper explores potential standards for bank tokens to enable interoperability for payments between banks. It maps various bank token functions against existing Ethereum token standards. However, this mapping process unveiled a couple of large gaps, particularly around payment orchestration. One example is AML and fraud analysis, which is based on large datasets, so would be processed off chain, and currently would be executed before the payment is initiated. The ERC-20 payment standard has three – payment and recipient wallet addresses and the amount. Banks need more variables. So, when a user wants to make a payment, the wallet would request the format of the payment information needed by the bank (or other entity with authority), and present the appropriate screen to the user for input. Once the user has entered the data, the bank responds to the wallet with the authorization, which is included in the on-chain transfer request. The transfer and authorization would be validated on -chain, for example, to ensure that the payment amount does not exceed the amount authorized. Stepping back, JP Morgan is keen for these standards to be “designed to be narrow in scope and componentized in a way that allows them to be easily composed with other standards,” the authors wrote.