JPMorgan Chase & Co. took part in its first blockchain transaction. On May 20, the banking major used assets from BlackRock, the world’s largest asset manager, to transfer an amount of tokenized money market fund (MMF) shares as collateral. Despite the fact that it was not directly involved in the transaction, the asset management firm has long been interested in blockchain technology and its application in financial assets.
Experts feel that the pilot transaction expands investors’ options by allowing them to use a broader range of assets as collateral. Furthermore, because this technology is decentralized and totally onchain, investors and traders can make transactions at any time, even outside of market hours.
Ben Challice, JPMorgan’s Global Head of Trading Services, said in an interview that the assets were transferred instantly and seamlessly in the pilot transaction. He went on to say:
“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.”
JPMorgan is also working on expanding its tokenized collateral offerings to cover equities and fixed income assets, according to sources.
In recent years, JPMorgan has made significant moves in the blockchain and crypto industry, adopting digital assets and decentralized technology. In a statement released on May 25, the firm also stated that Bitcoin’s “fair price” is 28 percent higher than its current trading level.
The company’s own digital assets platform, Onyx Digital Assets, was launched in 2020, allowing fixed income market trading on a blockchain-based network for the first time. The Tokenized Collateral Network (TCN), a new application on the Onyx blockchain, assisted with the collateralization of the tokenized MMF. JP Morgan’s Collateral Services team and Onyx collaborated on the TCN app, which will allow users to transfer these assets as collateral.
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