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It has been reported that JP Morgan, one of the world’s largest investment banks, has launched its Tokenized Collateral Network (TCN). TCN is a blockchain-based application that enables JP Morgan clients to use tokenized assets as collateral.
TCN’s First Transaction Includes BlackRock and Barclays Clients
According to a Bloomberg report based on an interview with Tyrone Lobban, President of JPMorgan Onyx Digital Assets, TCN has completed its first transaction involving BlackRock and Barclays clients. BlackRock used TCN to convert shares in a money market fund into digital tokens, which were then transferred as collateral to Barclays for over-the-counter derivative trading.
JPMorgan internally tested TCN in May 2022 by transferring tokenized share representations from a BlackRock money market fund to be used as collateral on their private blockchain-based platform, Onyx Digital Assets. Ed Bond, Head of JPMorgan’s Trading Services, stated in an interview with Bloomberg that TCN is active and that JPMorgan has a pipeline of other clients and transactions.
According to Lobban, TCN helps facilitate the transfer of collateral almost instantly, compared to the typically days-long process. Lobban added that if the application is implemented on a larger scale, it would increase efficiency by allowing locked capital to be used as collateral in ongoing transactions.
Various Collateral Assets will be Used
While TCN initially focuses on money market funds, it is reported to also support other assets as collateral, including stocks and fixed income. Asset tokenization is believed to lead to faster transaction processing. The essence of TCN is similar to skipping the step of converting paper money to coins when using a vending machine, as tokens can be used directly and snacks can be obtained faster.
In addition, JP Morgan operates a blockchain-based payment system called JPM Coin. JPM Coin allows transactions to be processed faster, enabling customers to make payments just before their due dates. Recently, JPM Coin also started supporting Euro transactions in addition to its existing support for US dollar transactions.