JPMorgan has announced a significant milestone, revealing that it successfully conducted its inaugural live blockchain-based collateral settlement transaction involving BlackRock and Barclays. This transaction utilized JPMorgan’s Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN).

BlackRock employed this system to tokenize shares from one of its money market funds, which were subsequently transferred to Barclays Plc to serve as collateral in an over-the-counter (OTC) derivatives trade.

The tokenization of traditional financial assets represents a significant development for banks, and JPMorgan has been at the forefront of this initiative. Other major players, such as Citi, are also making strides in this space.

JPMorgan’s Blockchain Collateral Settlement

The TCN application facilitated the conversion of shares from one of BlackRock’s money market funds into digital tokens. According to Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, these tokens were swiftly transferred to Barclays as collateral for an over-the-counter derivatives trade.

The tokenization process took only a matter of minutes, enabled by the connectivity between the fund’s Transfer Agent and TCN, as stated in the press release by JPMorgan. The near-instantaneous transfer between BlackRock and Barclays marks a significant milestone for all three entities involved, as it represents the first instance of money market fund shares being utilized as collateral between bilateral derivatives counterparts.

Lobban highlighted that Onyx Digital Assets enables clients to access intraday liquidity via repo transactions. 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, he added.

JPMorgan Spearheads Tokenization

Since the TCN application is live, JPMorgan has a pipeline of other clients and transactions, according to Lobban. Notably, the bank conducted an internal transaction to test TC