JPMorgan Pilots Collateral Settlement Using Blockchain

The Wall Street giant is using blockchain technology for collateral settlement. The pilot transaction was conducted last week. 

First Blockchain Transaction Done

JPMorgan Chase & Co. participated in its first blockchain transaction as a company. On May 20, the banking giant transferred an amount of tokenized money market fund (MMF) shares as collateral, involving assets from the world’s largest asset manager, BlackRock. Even though the latter was not directly involved in the transaction, the asset management company has been interested in blockchain technology and its implementation in financial assets for a while now.

Experts believe that the pilot transaction opens up doors of opportunities for investors who can now access a broader spectrum of assets as collateral. Also, due to the decentralized and entirely onchain nature of this technology, investors and traders can conduct transactions whenever they want, even beyond market hours. 

“Frictionless Transfer”

JPMorgan’s Global Head of Trading Services, Ben Challice, spoke about the pilot transaction in an interview, saying that the assets were transferred instantaneously and seamlessly. 

He further stated, 

“The collateral ecosystem is becoming ever more complicated…physically settling assets in order to meet collateral obligations using ageing infrastructure has become intensive from a financial and human capital perspective. We can now offer participants the option to transfer money market fund units as collateral in tokenised form, increasing the liquidity of this asset class. This is a big moment for the collateral industry as it demonstrates that the technology works with an asset class that has been hard to transfer historically.”

According to further reports, JPMorgan is even working on expanding its tokenized collateral offerings to include equities and fixed income assets. 

Teaming Up With Onyx For Collateral Network

JPMorgan has been making strong moves in the blockchain and crypto space by embracing digital assets and decentralized technology in recent years. The company has also recently declared via a statement published on May 25 that the “fair price” of Bitcoin is 28% higher than its current trading level. 

The launch of the company’s own digital assets platform, Onyx Digital Assets, in 2020 was the beginning of enabling fixed income market trading on a ​​blockchain-based network. The collateralization of the tokenized MMF was supported by the launch of a new application, the Tokenized Collateral Network (TCN) on the Onyx blockchain. The TCN app was jointly developed by JP Morgan’s Collateral Services team and Onyx and will allow users to transfer these assets as collateral.

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.