Disclaimer: Information found on CryptoreNews is those of writers quoted. It does not represent the opinions of CryptoreNews on whether to sell, buy or hold any investments. You are advised to conduct your own research before making any investment decisions. Use provided information at your own risk.
CryptoreNews covers fintech, blockchain and Bitcoin bringing you the latest crypto news and analyses on the future of money.
JPMorgan has disclosed a notable achievement, announcing that it has successfully executed its first live blockchain-based collateral settlement transaction involving BlackRock and Barclays. This transaction made use of JPMorgan’s Ethereum-based Onyx blockchain along with the bank’s Tokenized Collateral Network (TCN).
BlackRock utilized this system to tokenize shares from one of its money market funds, which were then transferred to Barclays Plc to act as collateral in an over-the-counter (OTC) derivatives transaction.
The tokenization of conventional financial assets signifies a major advancement for banks, with JPMorgan leading the way in this effort. Other significant institutions, such as Citi, are also progressing in this area.
JPMorgan’s Blockchain Collateral Settlement
The TCN application enabled the transformation of shares from one of BlackRock’s money market funds into digital tokens. As noted by Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, these tokens were promptly transferred to Barclays as collateral for an over-the-counter derivatives transaction.
The tokenization process was completed in just a few minutes, facilitated by the connection between the fund’s Transfer Agent and TCN, as indicated in the press release from JPMorgan. The rapid transfer between BlackRock and Barclays represents a significant achievement for all three parties involved, marking the first occasion that money market fund shares have been used as collateral between bilateral derivatives counterparts.
Related Posts
Lobban pointed out that Onyx Digital Assets allows clients to access intraday liquidity through repo transactions. With the introduction of TCN, clients can gain additional utility from their MMF investments by using tokenized MMF shares as collateral – a quicker, more economical method of fulfilling margin requirements, he noted.
JPMorgan Leads in Tokenization
Since the TCN application became operational, JPMorgan has a pipeline of additional clients and transactions, according to Lobban. Importantly, the bank executed an internal transaction to test TCN in May.
Proponents of blockchain technology contend that its implementation will streamline the process for financial institutions to leverage their shares in money market funds as collateral. This is because they will not need to redeem them for cash, a step that is necessary in traditional methods. This transition could result in quicker transactions and potentially lower risks during periods of market volatility.
Tom McGrath, Deputy Global COO of the Cash Management Group at BlackRock, underscored that tokenizing money market fund shares as collateral in clearing and margin transactions would significantly diminish the operational friction in addressing margin calls when market segments experience acute margin pressures.
Alongside TCN, JPMorgan also manages JPM Coin, a system that allows wholesale clients to execute dollar and euro-denominated payments via a blockchain network. From its inception until June of that year, the bank processed around $300 billion through this system. JPMorgan also oversees a blockchain-based repo application and is investigating a digital deposit token to accelerate cross-border settlements.
SPECIAL OFFER (Sponsored) Binance Free $100 (Exclusive): Use this link to register and receive $100 free and 10% off fees on Binance Futures first month (terms).
PrimeXBT Special Offer: Use this link to register & enter CRYPTOPOTATO50 code to receive up to $7,000 on your deposits.
