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JPMorgan's Tokenized Collateral Network (TCN), a collateral settlement application based on blockchain technology, has reportedly gone live with the successful completion of its first transaction involving BlackRock and Barclays clients.
In that transaction, BlackRock used TCN to convert shares of one of its money market funds into digital tokens, subsequently transferring them to Barclays as collateral for an OTC derivatives deal between the two companies, according to a Bloomberg report.
The initial testing of TCN within JPMorgan was conducted internally in May 2022. During this testing, tokenized equity representations of a BlackRock money market fund were transferred to serve as collateral on JPMorgan's private blockchain platform - Onyx Digital Assets .
Now that TCN is up and running, JPMorgan has a number of other clients and deals in the pipeline, Ed Bond, head of trading services at JPMorgan, revealed in an interview with Bloomberg.
Lobban said TCN significantly speeds up the movement of collateral, surpassing the conventional one-day process. If implemented on a wider scale, the app has the potential to increase efficiency by freeing up locked-up capital for use as collateral in ongoing trades.
While TCN is initially focused on money market funds, it is reportedly exploring the possibility of adding support for a wider range of assets as collateral, including equities and fixed income assets.
Asset tokenization is expected to lead to faster transactions, similar to bypassing the step of turning paper money into coins when using a vending machine. With tokens, transactions can be processed quickly.
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