JPMorgan Chase & Co, a multinational investment bank, is apparently testing the use of its own private blockchain for collateral settlements.
JPMorgan performed a trial transaction on May 20 in which two of its businesses transferred a tokenized version of Black Rock Inc. money market fund shares, according to Bloomberg.
A money market fund is a form of mutual fund that gives exposure to liquid and short-term assets such as cash, cash equivalents, and debt instruments with excellent credit ratings, making it a low-risk investment.
JPMorgan’s bigger ambition for its private blockchain, according to the bank, is to allow investors to put forth a wide range of assets as collateral that may be used outside of typical market conditions.
“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis.” BlackRock wasn’t a counterparty, but it has been heavily involved in the initiative “since day one and are exploring use of this technology.”Stated JPMorgan’s global head of trading services Ben Challice
JPMorgan has been into blockchain and crypto for long
JPMorgan has been interested in crypto and blockchain technology for a long time, and in late 2020, it launched Onyx Digital Assets (ODA). The project is a “blockchain-based network that facilitates the processing, recording, and Delivery-versus-Payment (DVP) exchange of digital assets across asset classes,” according to the description.
While it’s unclear whether JPMorgan used the ODA in this case, it’s set up to swap cash for various types of tokenized collateral, provide intraday liquidity, and provide access to the bank’s digital payment infrastructure token JPM Coin.
Tyrone Lobban, head of JPMorgan’s Blockchain Launch and the ODA, said the bank is attempting to foresee a scenario in which a greater range of traditional financial services will be offered.
BNP Paribas, a European bank, completed its first trade through the ODA earlier this week to test tokenized fixed income market trading.
BNP Paribas Global Markets managing director and head of US repo trading and sales Christopher Korpi commented on the decision, emphasizing the importance of being able to optimize its procedures using blockchain technology.