JPMorgan Chase has gone live with its first blockchain-based collateral settlement for clients, Bloomberg reported on Wednesday.
JPMorgan formed its blockchain division Onyx in 2020, as it sought to expand its blockchain-based offerings. The bank began testing its Tokenized Collateral Network (TCN) in May 2022 and traded tokenized cash deposits on the Polygon blockchain in November 2022.
Now, TCN was used by asset management firm BlackRock to tokenize shares of one of its money market funds, which BlackRock then transferred to Barclays Plc to use as collateral on an over-the-counter (OTC) derivatives trade between the two.
The tokenization used JPMorgan’s Ethereum-based Onyx blockchain and the collateral was able to move almost instantly versus over a day in traditional trading. The speed of the transfer could attract more traditional finance players toward using blockchain-based technology to get faster access to assets.
JPMorgan eventually wants to allow clients to use other assets as collateral such as equities and fixed income.
“Institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading,” Ed Bond, head of trading services at JPMorgan, told Bloomberg in an interview.
In an interview with CoinDesk in April, Tyrone Lobban, head of Onyx, said it was excited about the future of tokenization in traditional finance. “We think that tokenization is a killer app for traditional finance,” he said.