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JPMorgan has completed its first blockchain-based collateral settlement 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 is an area where JPMorgan is leading the way. Tokenization occurred within 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 was almost instantaneous and represents the first time for BlackRock, JPMorgan and Barclays that MMF shares are used as collateral between bilateral derivatives counterparties, it said.
The head of Onyx Digital Assets at JPMorgan noted that Onyx Digital Assets already allows clients to access intraday liquidity through repo transactions. Now, with the launch of TCN, clients 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