American banking giant JP Morgan debuted its in-house blockchain collateralization platform called Tokenized Collateral Network (TCN) on Oct. 11, reported Bloomberg. TCN settled its first trade for asset management giant BlackRock.
Tokenized Collateral Network is an application that allow investors to utilize assets as collateral. Using blockchain technology they can transfer collateral ownership without moving assets in underlying ledgers.
The TCN network in its first public collateralized trade between JP Morgan and BlackRock turned shares of one money market fund into digital tokens, which were then transferred to Barclays Plc as security for an over-the-counter derivatives exchange between the two companies.
The first internal test of TCN was conducted by JPMorgan in May 2022 and has a pipeline of other clients and transactions now that TCN is live. JP Morgan’s tokenization network was launched with the aim to streamline and scale the process of settling traditional settlements on a blockchain. The use of decentralized technology made the process faster, more secure and more efficient.
According to Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, the new TCN platform unlocks capital that has been locked up and allows it to be used as collateral in ongoing transactions, the technology would boost efficiency at scale. The platform makes it possible to create, transfer, and settle tokenized traditional assets. The tokenization platform allows for the movement of collateral nearly instantly as opposed to other methods used earlier.
The blockchain platform makes way for clients to access intraday liquidity through a secured repo transaction using tokenized collateral, rather than depending on expensive unsecured credit lines. External clients who agree to the blockchain trade have their own node using which they can settle the trade and access other reports.
The American banking giant has come a long way from its early days of criticism for the decentralized world and is currently actively involved in testing and launching various blockchain and crypto-centred services amid growing demand. The bank used a blockchain-based solution to settle trades with Indian banks in June earlier this year.