JPMorgan, one of the largest banks in the United States, has launched its own blockchain-based tokenization application called the Tokenized Collateral Network (TCN). This application allows investors to utilize their assets as collateral by transferring ownership through blockchain technology. The first trade settled through TCN was between JPMorgan and asset management giant BlackRock, where shares of a money market fund were converted into digital tokens and transferred to Barclays bank as security for an over-the-counter derivatives exchange.
The TCN was initially tested internally by JPMorgan in May 2022, and now that it is live, the bank has a pipeline of other clients and transactions. The main goal of TCN is to streamline and scale the traditional settlement process by leveraging blockchain technology, which makes the process faster, more secure, and more efficient. According to Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, the platform unlocks capital and improves efficiency at scale by allowing collateral to be used in ongoing transactions and enabling the creation, transfer, and settling of tokenized traditional assets.
JPMorgan’s foray into blockchain technology demonstrates its shift towards embracing the decentralized world and meeting the growing demand for blockchain and crypto-centered services. The bank has previously used blockchain-based solutions to settle trades with Indian banks and continues to explore and launch innovative blockchain initiatives. With the launch of TCN, clients can access intraday liquidity through secured repo transactions using tokenized collateral, eliminating the need for expensive unsecured credit lines. External clients also have their own node on the blockchain platform to settle trades and access other reports.
