JPMorgan Uses In-House Blockchain to Tokenize PE Fund

JPMorgan Chase is reportedly deepening its involvement in the world of digital tokens.

Officials at the country’s largest bank told the Wall Street Journal (WSJ) Thursday (Oct. 30) that JPMorgan had tokenized a private-equity fund on its blockchain platform for the wealthy clients served by its private bank.

“For the alternative investments industry, it’s just a matter of time that a blockchain-based solution is going to be adopted,” Anton Pil, head of global alternative investment solutions for JPMorgan’s asset management arm, told the WSJ.

“It’s more about simplifying the ecosystem of alternatives and making it, frankly, a little easier to access for most investors.”

For example, a tokenized fund allows all parties to share one real-time view of who owns what and who has paid up on their investment promises, the report said. This helps lessen the surprises that come with “capital calls,” or the requests from private fund managers to investors to offer up a portion of the capital they had committed.

According to the WSJ, this move comes ahead of JPMorgan’s wider rollout next year of its fund tokenization platform, Kinexys Fund Flow. That platform pulls in data from fund managers, distributors and administrators, creates smart contracts representing fund ownership, and allows for the near-instant exchanging of cash and assets on the blockchain.

Tokenization, the report said, allows the bank to offer clients a digital representation of the ownership of an asset kept on a blockchain ledger.

As the WSJ noted, banks that have expressed a past wariness of cryptocurrencies have nonetheless argued for the potential of blockchain technology. The recent passage of the Genius Act, which established a regulatory framework for stablecoins has ushered in a broader wave of tokenization.

Goldman Sachs and Bank of New York Mellon announced a partnership in July to launch digital tokens that confer ownership of money-market funds managed by their asset management operations as well as investment firms like BlackRock and Fidelity.

This partnership, PYMNTS wrote, isn’t simply about faster transactions, but rather “about programmable liquidity and a treasury function that increasingly operates in real time.”

And it’s happening against a backdrop of pro-crypto regulatory momentum — such as the Clarity Act — and interest from the traditional financial sector and that sector’s largest clients.

“Banks are in the state where they are thinking about blockchains as public infrastructure that they need to rely on,” Chainalysis Co-founder and CEO Jonathan Levin said in an interview with PYMNTS CEO Karen Webster published April 7. “Without a federal framework, it is incredibly difficult for financial services firms and international enterprises to really get comfortable.”

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