J.P. Morgan Chase says it has marked a milestone with its tokenized collateral network (TCN).
The banking giant announced Wednesday (Oct. 10) that the network had facilitated its first collateral settlement for a live client over-the-counter (OTC) derivative transaction.
“BlackRock and Barclays are now live on TCN, an application which sits on J.P. Morgan’s Onyx Digital Assets platform, operating as a private blockchain which is used for tokenized asset movements including collateral settlements,” J.P. Morgan said in a news release provided to PYMNTS.
According to the release, BlackRock has tokenized the representation of shares in a money market fund (MMF) though TCN. Using blockchain settlement technology to transfer the ownership of MMF shares will add utility to MMFs and potentially increase their resiliency.
“The Tokenized Collateral Network is a significant investment in the future of collateral markets,” said Ed Bond, J.P. Morgan’s head of trading services.
“This first transaction with BlackRock and Barclays demonstrates the power of tokenized assets, particularly in a collateral setting. MMFs can now be mobilized and utilized in a more efficient way, unlocking new pools of liquidity to be used for margining.”
Earlier this year, J.P. Morgan said it was committed to tokenizing traditional finance, with the bank having processed — as of April — close to $700 billion in short-term loan transactions via Onyx, a permissioned version of the Ethereum blockchain.
“We think that tokenization is a killer app for traditional finance,” Onyx program head Tyrone Lobban told CoinDesk.
“If you think about private markets — private credit, private equity and private real estate — they are pretty much double the size of public markets, but many orders of magnitude less liquid, so there’s this huge disparity.”
Meanwhile, PYMNTS observed earlier this week that blockchain was being increasingly embraced by mainstream and traditional financial players.
“The true intrinsic value of blockchain, which is around programmability of transactions, immutability of transactions, and the ability to do delivery versus payment and always-on types of payments, has yet to be unlocked,” Mastercard Chief Digital Officer Jorn Lambert said in an interview here in July.
“There’s a huge global trend going on right now into exploring the intricacies, complexities, difficulties and benefits of leveraging the properties of DLT for the financial system,” Daniel Field, global head of blockchain at UST, told PYMNTS around the same time.