JPMorgan has completed its first blockchain-based collateral transaction involving BlackRock and Barclays, the US banking giant said on Wednesday. JPMorgan’s Ethereum-based Onyx blockchain and the bank’s tokenized collateral network (TCN) were used by BlackRock to tokenize shares of one of its money market funds (MMFs). The tokens were then transferred to Barclays Plc as collateral in over-the-counter derivatives trading.
Tokenization of traditional financial assets is important for banks, and it’s an area where JPMorgan is leading the way. Tokenization took place in minutes thanks to a connection between the fund’s transfer agent and TCN, JPMorgan said in a press release. The transfer between Blackrock and Barclays took place almost immediately and marks the first time for BlackRock, JPMorgan and Barclays that MMF shares have been used as collateral between bilateral derivatives counterparties, the report said.
The head of Onyx Digital Assets at JPMorgan noted that Onyx Digital Assets already gives clients access to intraday liquidity through repo transactions. Now, with the launch of TCN, customers can further benefit from their MMF investment by posting tokenized MMF shares as collateral – a faster and more cost-effective way to meet margin requirements.
Image: ABC News