JPMorgan Debuts Tokenized BlackRock Shares as Collateral with Barclays

BlackRock said tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls.

AccessTimeIconOct 11, 2023 at 9:32 a.m. UTC
Updated Oct 11, 2023 at 2:36 p.m. UTC
10 Years of Decentralizing the Future
May 29-31, 2024 - Austin, TexasThe biggest and most established global hub for everything crypto, blockchain and Web3.Register Now

JPMorgan has carried out its first live blockchain-based collateral settlement transaction involving BlackRock and Barclays, the U.S. banking giant said on Wednesday.

JPMorgan’s Ethereum-based Onyx blockchain and the bank’s Tokenized Collateral Network (TCN) was used by BlackRock to tokenize shares in one of its money market funds. The tokens were then transferred to Barclays Plc for collateral in an OTC (over-the-counter) derivatives trade.

The tokenization of traditional financial assets is a big deal for banks, and it’s an area JPMorgan has been leading the charge with, now joined by the likes of Citi and others.

Tokenization occurred within a matter of minutes through connectivity between the fund’s Transfer Agent and TCN, JPMorgan said in a press release. The transfer between Blackrock and Barclays was near instantaneous and represents a first for BlackRock, J.P. Morgan and Barclays, where the shares in MMFs are used as collateral between bi-lateral derivatives counterparts, it said.

“Onyx Digital Assets already enables clients to access intraday liquidity via repo transactions,” said Tyrone Lobban, JPMorgan’s Head of Onyx Digital Assets, in a statement. “Now with the launch of TCN, clients can benefit from additional utility from their MMF investments by posting tokenized MMF shares as collateral – a faster, more cost-effective way of meeting margin requirements.”

Tom McGrath, Deputy Global COO of the Cash Management Group at BlackRock, added: “The tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.”

Edited by Oliver Knight.

Disclosure

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. In November 2023, CoinDesk was acquired by the Bullish group, owner of Bullish, a regulated, digital assets exchange. The Bullish group is majority-owned by Block.one; both companies have interests in a variety of blockchain and digital asset businesses and significant holdings of digital assets, including bitcoin. CoinDesk operates as an independent subsidiary with an editorial committee to protect journalistic independence. CoinDesk offers all employees above a certain salary threshold, including journalists, stock options in the Bullish group as part of their compensation.

Ian Allison

Ian Allison is an award-winning senior reporter at CoinDesk. He holds ETH.


Learn more about Consensus 2024, CoinDesk's longest-running and most influential event that brings together all sides of crypto, blockchain and Web3. Head to consensus.coindesk.com to register and buy your pass now.