JPMorgan Begins Processing Collateral Settlements Using Blockchain

Vignesh Karunanidhi
JPMorgan Chase is developing a blockchain-based digital deposit token to speed up cross-border payments, according to sources.
Source: JPMorgan

JPMorgan has begun experimenting with traditional financial asset trading utilizing blockchain technology for collateral settlements. The first-ever transaction utilizing blockchain happened on May 20. The transaction was the transfer of token representation of BlackRock.

The initiative will assist investors in pledging and utilizing different assets outside of market hours.

“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis.” While BlackRock wasn’t a counterparty, “they have been heavily involved since Day One, and are exploring use of this technology.”

Ben Challice, JPMorgan’s global head of trading services

Derivatives and repo trading, as well as securities lending, can all benefit from blockchain-based collateral settlement. The bank intends to expand tokenized collateral to cover equities, fixed income, and other asset classes in the coming months.

Source: Investopedia

JPMorgan deploys application on the Onyx blockchain

To support the initiative of collateralized trade, JPMorgan has launched an Onyx Digital Assets Blockchain-based application. This will allow the investors to transfer tokenized shares as collateral on the blockchain.

To ensure that the process works seamlessly, the collateral provider and receiver must be present on the blockchain application.

JPMorgan has been a proponent of blockchain technology and, in recent years, has increasingly embraced digital assets. Over time, its blockchain could potentially be a bridge that connects institutional investors with decentralized finance platforms in the crypto economy, 

Tyrone Lobban, head of JPMorgan’s Blockchain Launch and Onyx Digital Assets

The whole initiative envisions the bank being able to support the growing crypto adoption and the rising financial transactions on the blockchain. JPMorgan has been utilizing the blockchain since 2020 for repo transactions and to conduct intraday repurchases. The bank has recorded a whopping $300 billion in repo transactions to date.

JPMorgan has shown a positive sign for cryptocurrencies and their underlying technology. The bank also stated recently that it envisions bitcoin rising by 28% to its fair price. It also added that it considers crypto as a preferred alternative asset.