JPMorgan Launches Blockchain-Based Collateral Settlement Platform

JPMorgan, BlackRock, and Barclays complete the first transaction using tokenized collateral network.

JPMorgan has officially launched its blockchain-based collateral settlement platform, Tokenized Collateral Network (TCN). The platform enables conversion of assets into digital tokens that serve as transaction collateral, aiming to increase efficiency and liquidity in the financial markets by reducing the time and cost of collateral movement.

BlackRock and Barclays have completed the first TCN transaction. BlackRock converted shares from one of its money market funds into digital tokens using TCN. These tokens were then provided to Barclays as collateral for an over-the-counter derivatives trade between the two institutions.

Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, stated that TCN expedites collateral transfers nearly instantly, compared to the usual day-long process. The platform also permits restricted capital to serve as collateral in concurrent transactions. TCN initially focuses on money market funds, but the platform aims to broaden its support to other types of assets as collateral, including equities and fixed income. Asset tokenization facilitates faster transactions by eliminating the need to convert assets into cash or other collateral forms.

JPMorgan internally tested TCN in May 2022 by transferring tokenized share representations from a BlackRock money market fund to utilize as collateral on the Onyx Digital Assets private blockchain platform. With TCN now in operation, JPMorgan has a backlog of further clients and transactions, according to Ed Bond, head of Trading Services at JPMorgan.

Additionally, JPMorgan operates a blockchain payment system known as JPM Coin that operates beyond typical banking hours and is faster. JPM Coin recently expanded its transaction support to include euros, alongside the previously supported U.S. dollar transactions.