JPMorgan Chase & Co. JPM has reportedly unleashed a blockchain revolution, initiating collateral settlement for clients as the bank moves towards the commercial applications of the technology, which is rooted deep within the foundation of cryptocurrency.
The notable venture is utilizing the bank's Tokenized Collateral Network (TCN), which saw its practical use by BlackRock Inc. BLK, and represents a step forward in the practical application of blockchain in financial transactions, according to a news report by Bloomberg, citing statements from Tyrone Lobban, head of Onyx Digital Assets at JPMorgan.
BlackRock employed TCN to convert shares from one of its money market funds into digital tokens. These were subsequently transferred to Barclays PLC BCS for collateral in an over-the-counter derivatives trade between the two entities.
JPMorgan had tested its TCN in May, the report added.
The development is a nascent step where a blockchain app developed by a bank like JPMorgan boldly enters commercialization.
However, its volumes echo quietly compared to JPMorgan's overall business.
Advocates for blockchain articulate that leveraging this technology will streamline the process for financial institutions to utilize their shares in money-market funds as collateral, eliminating the need to redeem them for cash as necessitated by prevailing traditional processes, Bloomberg noted.
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Per JPMorgan's Lobban, employing the bank's blockchain network, Onyx Digital Assets enabled the collateral to transition nearly instantaneously, in stark contrast with "over the course of a day," as noted in the report. When applied at scale, he stated, the technology would boost efficiency by "freeing up locked capital so that it could be used as collateral in ongoing transactions," Bloomberg added.
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Exploring Additional Blockchain Opportunities with JPM Coin
This apart, JPMorgan operates a system dubbed JPM Coin, facilitating wholesale clients to execute payments denominated in dollars and euros via a blockchain network, the report read.
Since its inauguration until June this year, the bank has utilized it to navigate approximately $300 billion in transactions.
Furthermore, the company manages a blockchain-based repo application and is investigating a digital deposit token to hasten cross-border settlements, Bloomberg added.
Price Action: JPM shares are trading higher by 0.38% to $146.21 premarket on the last check Wednesday.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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