JPMorgan has begun testing a traditional financial asset transaction that uses blockchain technology for collateral payments. The first transaction using blockchain happened on May 20th. This transaction was a transfer of BlackRock token representation.
This initiative will assist investors in pledging and using various assets outside of market hours.
“What we have achieved is an easy instant transfer of collateral.” Although BlackRock is not a partner, “they have been heavily involved since Day One and are exploring the use of this technology.“Ben Challice, global head of commercial services at JPMorgan
Derivatives and repo trading, as well as securities lending, can all benefit from blockchain-based collateral settlement. The bank intends to expand crypto collateral to cover stocks, fixed income, and other asset classes in the coming months.
JPMorgan deploys application on Onyx blockchain
To support its mortgage trade initiative, JPMorgan has launched its Blockchain-based application Onyx Digital Assets. This will allow investors to transfer tokenized shares as collateral on the blockchain.
To ensure that the process works seamlessly, the provider and recipient of the collateral must be present on the blockchain application.
“JPMorgan is a proponent of blockchain technology and in recent years has increasingly embraced digital assets. Over time, its blockchain has the potential to be the bridge connecting institutional investors with decentralized financial platforms in the crypto economy.”Tyrone Lobban, Head of JPMorgan’s Blockchain Launch Department and Onyx Digital Asset
The entire initiative envisions that the bank can support the growing adoption of cryptocurrencies and growing financial transactions on the blockchain. JPMorgan has been using blockchain since 2020 for repo transactions and conducting intraday buybacks. The bank has recorded a whopping $300 billion in repo transactions to date.
JPMorgan has shown a positive sign for cryptocurrencies and their underlying technology. The bank also recently stated that it predicts bitcoin to rise 28% from its fair price. It also added that it considers cryptocurrencies as a preferred alternative asset.