JPMorgan’s blockchain-based collateral settlement application goes live.

JPMorgan’s Blockchain-Based Tokenized Collateral Network (TCN) Achieves Successful Launch, Advancing Collateral Settlement. The application completed its first transaction involving BlackRock and Barclays as clients.

During the transaction, BlackRock utilized TCN to convert shares from one of its money market funds into digital tokens. These tokens were transferred to Barclays as collateral for an over-the-counter derivatives trade between the two institutions. This process was made possible by the use of blockchain technology.

The successful completion of this transaction demonstrates the potential of TCN in streamlining and expediting collateral settlement. According to Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, TCN enables collateral to be moved almost instantly, significantly faster than the traditional day-long process. Lobban also mentioned that implementing TCN on a larger scale could enhance efficiency by unlocking capital tied up as collateral for ongoing transactions.

Although TCN is initially focused on money market funds, it plans to expand its support to other assets as collateral, including equities and fixed income. The tokenization of assets facilitates faster transactions by eliminating the need to convert physical assets into digital form. This analogy can be likened to using tokens directly in a vending machine, skipping the step of converting paper money into coins.

JPMorgan’s blockchain-based payment system, JPM Coin, has also facilitated faster and more efficient transactions. JPM Coin, which operates beyond standard banking hours, recently added support for euro transactions and its existing support for U.S. dollars.

With the successful launch of TCN and the pipeline of clients and transactions that JPMorgan has lined up, the blockchain-based collateral settlement application is expected to make significant strides in enhancing the efficiency and speed of collateral transactions in the financial industry.