According to CoinDesk, JPMorgan has successfully executed its first live blockchain-based collateral settlement transaction involving BlackRock and Barclays. The transaction utilized JPMorgan's Ethereum-based Onyx blockchain and the bank's Tokenized Collateral Network (TCN). BlackRock used the platform to tokenize shares in one of its money market funds, which were then transferred to Barclays Plc as collateral in an over-the-counter (OTC) derivatives trade.
The tokenization of traditional financial assets is a significant development for banks, with JPMorgan at the forefront, now joined by other major players such as Citi. The tokenization process took only minutes, facilitated by the connectivity between the fund's Transfer Agent and TCN. The near-instantaneous transfer between BlackRock and Barclays marks a first for all three parties, where money market fund shares are used as collateral between bilateral derivatives counterparts.
Tyrone Lobban, JPMorgan's Head of Onyx Digital Assets, stated that Onyx Digital Assets already allows clients to access intraday liquidity through repo transactions. With the launch of TCN, clients can now benefit from additional utility from their money market fund investments by posting tokenized shares as collateral, providing a faster and more cost-effective way of meeting margin requirements. Tom McGrath, Deputy Global COO of the Cash Management Group at BlackRock, added that tokenizing money market fund shares as collateral in clearing and margining transactions could significantly reduce operational friction in meeting margin calls during periods of acute margin pressure in the market.
