JP Morgan, the multinational banking firm, has successfully executed its first-ever cross-border transaction using decentralized finance (DeFi) on a public blockchain.
It has been reported that the trade was facilitated by the Monetary Authority of Singapore’s (MAS) Project Guardian on November 2, which was established as part of a pilot program to “explore potential decentralized finance (DeFi) applications in wholesale funding markets.”
However, the pilot was another step into examining how traditional financial institutions can use tokenized assets and DeFi protocols to conduct financial transactions, among other use cases. Singapore’s largest bank, DBS Bank; Tokyo-based banking firm SBI Digital Asset Holdings; and business leadership platform Oliver Wyman Forum also took part in the pilot program.
The report said that the trade was executed on Ethereum layer-2 network Polygon, using a modified version of the Aave protocol’s smart contract code. MAS said that a “live cross-currency transaction” was conducted, involving tokenized Singaporean dollar and Japanese yen deposits, along with a simulated exercise of buying and selling tokenized government bonds.
Tyrone Lobban, the Head of Blockchain Launch and Onyx Digital assets at JP Morgan’s Onyx business unit, shared the news noting the tokenized Singapore dollar deposits were the first issuance of tokenized deposits by a bank.
Sopnendu Mohanty, the Chief Fintech Officer of MAS, said it was a “big step” toward more efficient financial networks, and the latest pilot has helped develop the country’s digital asset strategy.
Thus, he added:
“The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralized finance have the potential to transform capital markets.”