JPMorgan Initiates First Collateral Settlement Using Digital Tokens, Blockchain

JPMorgan Chase & Co. JPM has initiated its inaugural collateral settlement using blockchain technology.

The bank's Tokenized Collateral Network (TCN) facilitated BlackRock Inc. BLK in converting shares from one of its money market funds into digital tokens.

These tokens were subsequently transferred to Barclays Plc BCS, serving as collateral for an over-the-counter derivatives deal between the two entities, according to Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, Bloomberg reported.

As the crypto sector continues to evolve, such groundbreaking applications of blockchain technology are expected to be a focal point at the upcoming Benzinga's Future of Digital Assets conference on Nov. 14. The event aims to delve deep into the transformative potential of digital currencies and the innovations steering the industry.

While blockchain has been on Wall Street's radar for nearly a decade, its commercial applications remain limited, leading some to question its practicality in the financial sector.

However, Lobban emphasized that JPMorgan's Onyx Digital Assets network ensures almost immediate collateral movement, in contrast to traditional methods that could take a day.

This efficiency could unlock capital for use as collateral in successive transactions.

Ed Bond, JPMorgan's head of trading services, revealed plans to expand the range of assets usable as collateral, encompassing equities and fixed income.

Beyond TCN, JPMorgan has introduced the JPM Coin, a blockchain system that facilitates payments in dollars and euros for wholesale clients.

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Since its inception, it has processed transactions worth approximately $300 billion up to June of this year.

The bank is also venturing into blockchain-based repo applications and is considering a digital deposit token to expedite cross-border settlements.

Other financial giants, including Goldman Sachs Group Inc. GS, are also venturing into blockchain and digital assets. Goldman Sachs launched its digital asset platform last November, enabling clients to issue digital financial securities in sectors like real estate.

Furthermore, firms like Banco Santander SA and Societe Generale SA have collaborated with the European Investment Bank to issue a digital bond using blockchain. Asset management companies, including Franklin Templeton, are also exploring blockchain-based transaction methods for their funds.

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