JPMorgan Chase & Co, the multinational investment bank, is reportedly trialing the use of its own private blockchain for collateral settlements.
It has been reported that JPMorgan conducted a pilot transaction on May 20, which saw two of its entities transfer a tokenized representation of Black Rock Inc. money market fund shares. A money market fund is a type of mutual fund that is considered to be a low-risk investment, as it offers exposure to liquid and short-term assets such as cash, cash equivalents, and debt securities with high credit ratings.
However, in terms of JPMorgan’s broader vision for its private blockchain, the bank said that it intends to enable investors to put forward a wide range of assets as collateral that can also be used outside of regular market hours. It pointed to equities and fixed income in particular.
Ben Challice, the Global Head of Trading Services at JPMorgan, said:
“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis.”
The report said that JPMorgan has been actively involved with crypto and blockchain tech for quite some time now and also founded Onyx Digital Assets (ODA) in late 2020. The project is described as a “blockchain-based network that enables the processing, recording, and Delivery-versus-Payment (DVP) exchange of digital assets across asset classes.”
Likewise, while it wasn’t specifically outlined if JPMorgan used the ODA in this instance, the network is geared up for the exchange of cash for different types of tokenized collateral, providing intraday liquidity and offering access to the bank’s digital payment infrastructure and token JPM Coin.
Tyrone Lobban, the Head of JPMorgan’s Blockchain Launch and the ODA, said that the bank is aiming to get ahead of a trend in which it sees a broader range of traditional financial services being offered via blockchain tech.
Thus, Lobban added:
“There will be a growing set of financial activities that happen on the public blockchain, so we want to make sure that we are able to not only support that but also be ready to provide related-services.”