US banking giant JP Morgan debuted its in-house blockchain-based tokenization application, the Token Collateral Network (TCN), on October 11. According to To Bloomberg. TCN has settled its first trade for asset management giant BlackRock.
Token Collateral Network is an application that allows investors to use assets as collateral. Using blockchain technology, investors can transfer ownership of collateral without moving assets on the underlying ledger.
In the first public collateralized trade between JPMorgan and BlackRock, TCN converted shares of a money market fund into digital tokens, which were then transferred to Barclays as collateral for an over-the-counter derivatives exchange between the two companies.
The first internal test of TCN was conducted by JPMorgan in May 2022, with a range of other clients and transactions going live TCN. TCN was launched to simplify and scale the traditional settlement process on the blockchain. The use of decentralized technology has made the process faster, safer and more efficient.
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According to Tyrone Lobban, Head of Onyx Digital Assets at JPMorgan, the new TCN platform unlocks capital and allows it to be used as collateral in ongoing transactions, enhancing efficiency at scale. The platform allows the creation, transfer and settlement of tokenized traditional assets. It also allows for almost instantaneous movement of collateral, unlike previous methods.
The blockchain platform allows customers to access intraday liquidity through a repo transaction collateralized using token collateral rather than relying on expensive unsecured lines of credit. External clients who agree to blockchain trades have their own node through which they can settle the trade and access other reports.
The American banking giant has come a long way since its early days criticizing the decentralized world and is currently actively involved in testing and launching several blockchain and cryptocurrency-focused services amid growing demand. The bank used a blockchain-based solution to settle transactions with Indian banks in June.
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