Banks including J.P. Morgan Chase & Co. and Citigroup Inc. have successfully tested the record-keeping technology behind bitcoin on credit-default swaps, a move that could help it gain a foothold in mainstream finance.

The swaps are essentially insurance contracts that pay off if a bond goes bad, and the process of keeping track of the over-the-counter products can be a burden. Banks match buyers and sellers, transmit the trades via a service run by data provider Markit Ltd. and send a record to Wall Street’s central bookkeeper, Depository Trust & Clearing Corp.

The new test showed that a portion of that record-keeping task could be accomplished using “blockchain,” a common ledger that each party can view in much the same way that multiple users can work on shared computer documents.

DTCC will now discuss whether the results are strong enough to warrant using the technology for live trades or across a broader swath of credit-default swaps, a market with trillions of dollars in outstanding contracts.

“The ink is still drying on the results, but they are positive,” said Chris Childs, chief executive of the DTCC unit that oversees over-the-counter derivatives.

The test helps make the case for using blockchain in core Wall Street activities. While alternative currency bitcoin itself has been embroiled in legal battles and volatility, the underlying ledger—which can be edited anywhere and instantly validated—has drawn heavy interest from mainstream finance.

Big banks recently have invested teams of people and millions of dollars finding ways to apply private blockchains to cut out middlemen and save money. Barclays PLC on Wednesday announced a partnership with bitcoin startup Circle Internet Financial Ltd. to enable the digital-currency startup’s mobile app to send and receive British pounds and to swap them for U.S. dollars.

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