Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

JPMorgan tokenises BlackRock-Barclays trade in blockchain first

Published 11/10/2023, 09:48 pm
Updated 11/10/2023, 10:00 pm
© Reuters.  JPMorgan tokenises BlackRock-Barclays trade in blockchain first
JPM
-
BARC
-
BLK
-

JPMorgan Chase & Co (NYSE:JPM) has broken new ground in the commercial blockchain space by facilitating a tokenised trade between BlackRock Inc (NYSE:NYSE:BLK) and Barclays PLC (LSE:LON:BARC), two of the world’s largest financial institutions.

The complex transaction was executed over JPMorgan’s private ‘Onyx Digital Assets’ blockchain platform.

Using Onyx’s Tokenized Collateral Network application, BlackRock was able to convert shares in one of its money market funds into tokens, which were sent across to Barclays.

These tokenised shares were then used as collateral in a derivates trade between BlackRock and Barclays.

Tyrone Lobban, head of Onyx Digital Assets, explained to Bloomberg that what typically takes a whole day took mere seconds.

Ed Bond, head of trading services at JPMorgan, commented that “institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading”.

“The tokenisation of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures,” explained BlackRock’s deputy global chief operating officer Tom McGrath.

Proponents of blockchain technology, which bitcoin and all other cryptocurrency assets are built on, have long touted its revolutionary potential, but mainstream adoption has been slow at best.

While the BlackRock-Barclays trade showed the potential utility of blockchain technology, Onyx is far from the decentralised ledger used in the crypto space.

Public blockchains, such as Bitcoin, Ethereum and Ripple, are run on the principles of transparency, decentralisation and traceability.

Any individual, theoretically, can contribute consensus to these blockchain protocols, and anyone, theoretically, can trace each and every transaction ever executed on them.

This makes them trustless, i.e. no centralised authority has the power to manipulate or alter the ledger.

Onyx does not share these principles. As a privately run blockchain, JPMorgan has ultimate control of its operations, and transactions are not publicly traceable.

So while Onyx is proof that blockchains will very likely find widespread institutional appeal in the financial services sector, mass adoption of truly decentralised, public blockchain technology remains a solution in search of a problem.

Read more on Proactive Investors AU

Disclaimer

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.