April 19, 2024
JPMorgan, BlackRock, and Barclays Lead the Way in Blockchain-Based Collateral Settlement
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JPMorgan, BlackRock, and Barclays Lead the Way in Blockchain-Based Collateral Settlement

BlackRock and Barclays were parties to JPMorgan’s first live blockchain-based collateral settlement transaction, the American banking behemoth announced on Wednesday.

BlackRock tokenized shares in one of its money market funds using JPMorgan’s Ethereum-based Onyx blockchain and Tokenized Collateral Network (TCN). To serve as collateral in an OTC (over-the-counter) derivatives deal, the tokens were then transferred to Barclays Plc.

For banks, the tokenization of conventional financial assets is a major thing. JPMorgan has been spearheading the drive in this area, and now companies like Citi and others have joined.

According to a press statement from JPMorgan, tokenization took place in a couple of minutes thanks to the connection between the fund’s transfer agent and TCN. It was a first for BlackRock, J.P. Morgan, and Barclays that the shares in MMFs were utilized as collateral between bilateral derivatives counterparties, and the transfer between Blackrock and Barclays was almost rapid.

“Onyx Digital Assets already enables clients to access intraday liquidity via repo transactions,” stated Tyrone Lobban, JPMorgan’s Head of Onyx Digital Assets, in a statement. “Now with the launch of TCN, clients can benefit from additional utility from their MMF investments by posting tokenized MMF shares as collateral—a faster, more cost-effective way of meeting margin requirements.”

Tom McGrath, Deputy Global COO of the Cash Management Group at BlackRock, concluded: “The tokenization 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.”

Image: Flickr

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