- JPMorgan, in collaboration with BlackRock and Barclays, has executed its first live collateral settlement using its private blockchain network, Onyx.
- BlackRock tokenized money market fund shares, which were used as collateral for a derivatives contract in the transaction.
- The blockchain-based settlement process was significantly faster, nearly instant, compared to the usual one-day settlement timelines.
JPMorgan has implemented its first live collateral settlement using its private blockchain network Onyx, in collaboration with BlackRock and Barclays. The transaction saw BlackRock tokenize money market fund shares, which were then transferred as collateral for a derivatives contract.
By leveraging blockchain for settlement, JPMorgan states the process was near instantaneous compared to the typical one-day settlement timelines. The bank contends this unlocks capital efficiencies at scale by enabling the re-use of collateral across ongoing transactions.
The bank moves more commercial use cases to production after internal tests
Now that its collateral trial is in commercial production, JPMorgan claims a pipeline of clients and use cases in development. The bank internally tested the network, dubbed the Tokenized Collateral Network (TCN), back in May.
The ability to tokenize and seamlessly transfer shares of funds as collateral is a frequently cited benefit of blockchain settlement. Avoiding cash redemption reduces friction and risk compared to traditional settlement workflows.
JPMorgan built TCN on its private Ethereum-based Quorum network, Onyx. The production rollout marks tangible progress for JPMorgan’s blockchain ambitions after years of exploring trials across finance.
Critics often argue blockchain technology lacks concrete utility based on the slow pace of commercial launches after extensive experimentation. But TCN’s graduation from proof-of-concept to live execution suggests incremental advancement.
JPMorgan aims to continue expanding TCN’s capabilities and asset support. The solution ultimately intends to cover broader collateral types, including equities and fixed-income securities.
With the derivatives trial under its belt, JPMorgan now must demonstrate the network’s ability to handle scaling transaction volumes across its sprawling clientele. But the recent milestone provides a blueprint for pragmatically migrating more institutional blockchain use cases to the market.