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BlackRock, the world’s largest asset manager, has tokenized its money market fund shared, which were later provided as collateral to Barclays in an over-the-counter derivatives deal, JPMorgan Chase & Co. announced on Wednesday.
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Fast Facts
- BlackRock executed the transaction on JPMorgan’s Ethereum-based Onyx blockchain and Tokenized Collateral network (TCN).
- Through Onyx, the collateral was transferred “almost instantaneously.” Traditional settlement solutions would take around the day for the transaction, Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, told Bloomberg.
- Lobban added asset tokenization increases capital efficiency by freeing up locked funds that can be used as collateral in new transactions.
- JPMorgan plans to eventually let client institutions use other assets as collateral, including equities and fixed income, Ed Bond, the head of trading services at JPMorgan told Bloomberg.
- JPMorgan has been exploring the tokenization of traditional financial assets since 2015 when it launched its blockchain program with the release of Quoruom, its permissioned fork of the Ethereum network.
- The third largest banking institution in the U.S., Citigroup launched Citi Token Services in September, a blockchain-based cross-border payment solution for institutions, which uses tokenized deposits and smart contracts for real-time settlements.
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