JPMorgan Chase & Co has successfully conducted its first live trade on a public blockchain.
The multi-national bank was able issue tokenised $71,000 through the trade. It was part the Singapore central bank’s pilot program that tested the use of Decentralised Finance (DeFi) within the banking sector. JPMorgan sold it to Japan’s SBI Digital Asset Holdings for tokenised Japanese yen.
This is a significant step towards entering the cryptocurrency system and demonstrates the potential for other global banks following its lead.
DBS Bank Ltd. and Standard Chartered PLC are also participating in the pilot testing rounds of JPMorgan’s live trading on a public blockchain.
JPMorgan isn’t the first to use blockchain technology for transactions.
JPMorgan Chase used cryptocurrency tokens to secure traditional financial asset transactions in May 20 for the first-time.
Although the live trade transaction wasn’t for cryptocurrency, the infrastructure that was used to execute it was created by crypto firms using the Polygon blockchain. JPMorgan used Polygon because it makes transactions on Ethereum cheaper. It also modified Aave, which is a major DeFi lending program.
Tyrone Lobban, Head of Blockchain Launch and Onyx Digital Assets, at JPMorgan, stated that today was “the first step to prove that we can trade in these public networks.” “The future is working towards scaling this pivotal moment.”
Several Wall Street institutions had been investigating blockchain before JPMorgan’s successful live trade. Research and testing for businesses that use blockchain are ongoing. This includes intraday repurchase, a type of short-term borrowing in fixed-income, and cross-border trades.
Banks’ current efforts are based on this however. Private blockchains Users must be granted permission to join.
Bloomberg reports that the use of public Blockchains can solve problems such as fragmented or isolated liquidity. This will allow the public to access the infrastructure.
Lobban stated that he and Bloomberg clearly saw what was happening in the public domain. He also said, “We can see how innovation is creating new ways to do financial transactions as well as new products.”
He said that the bank will explore other blockchain networks in future.
Bloomberg reports that JPMorgan announced in May that it would use blockchain technology for collateral settlement. The bank also plans to expand its reach to other asset types, such as fixed income and equities.
Two entities of the bank are using tokens from BlackRock money market funds shares as collateral for their private blockchains. This allows trading to take place outside of market hours.
The bank has already processed over $300 billion in blockchain-based repo transactions.
Blockchain-based collateral settlements will allow for more than just derivatives, repo transaction, securities lending and other transactions. They will also broaden the application scope of tokenized collateral, giving investors a greater range of assets to use as collateral.
Image source: Shutterstock