JPMorgan Taps Blockchain for Collateral Settlements

JPMorgan has been using blockchain to carry out collateral settlements, Bloomberg News reported Thursday (May 26).

The Wall Street heavyweight’s first such transaction happened last week when a pair of its entities transferred the token representation of BlackRock Inc. money market fund shares as collateral on its private blockchain.

JPMorgan said this effort will let investors pledge a broader range of assets as collateral and use them beyond the confines of market operating hours.

Read more: BNP Paribas Becomes Latest Bank to Embrace Blockchain

“What we’ve achieved is the frictionless transfer of collateral assets on an instantaneous basis,” Ben Challice, JPMorgan’s global head of trading services, told Bloomberg.

While BlackRock wasn’t a counterparty, “they have been heavily involved since Day One, and are exploring use of this technology,” he added.

The bank added that it plans to expand its efforts to include equities, fixed income and other asset types over the next few months.

This news comes days after a report that French bank BNP Paribas had joined the blockchain-powered network overseen by JPMorgan to use digital tokens for short-term trading in fixed income markets, thus stepping into a $12 trillion market.

JPMorgan has attracted more than $300 billion in cryptocurrency-focused business since it began working in the digital asset arena late last year. The partnership with BNP Paribas marks the first steps in efforts to use digital tokens in a crucial link in the global financial system.

As PYMNTS noted Monday (May 23), the repurchase market lets investors borrow high-quality assets for a couple of days and central banks conduct their monetary policies. Roughly 74% of these deals are backed by government bonds, per the Bank for International Settlements.

See also: Wall Street Embraces Crypto, but Will It Be Playing Catchup?

Last month, PYMNTS reported that a number of major Wall Street players had begun embracing blockchain-based cryptocurrencies after years of fervent opposition.

Among them are Jefferies Financial Group, which expanded its banking services for crypto clients. Goldman Sachs upped its crypto trading, while BlackRock Inc. invested in and formed a partnership with stablecoin company Circle.