JPMorgan has launched a new blockchain-based service that allows investors to use assets as collateral without moving them on underlying ledgers.
The Tokenized Collateral Network (TCN) service was announced on Oct. 11 by JPMorgan and its first client, BlackRock, the world’s largest asset manager.
TCN leverages zero-knowledge technology to enable the instantaneous transfer of collateral ownership while preserving the privacy and security of the transactions. TCN provides clients access to intraday liquidity through secure repo transactions using tokenized collateral. This eliminates the reliance on expensive, unsecured credit lines.
The first official trade executed on TCN involved JPMorgan and BlackRock converting shares of a money market fund into digital tokens. These tokens were transferred to Barclays as collateral for an over-the-counter derivatives trade between JPMorgan and BlackRock.
TCN is part of Onyx by JPMorgan, the bank’s innovation arm focusing on blockchain and digital assets. Onyx has pioneered the world’s first bank-led blockchain platform to exchange value, information, and digital assets. Onyx has partnered with leading firms like Starbucks, Square Enix, and L’Oreal.
Sandeep Nailwal, co-founder of Polygon and head of Onyx’s Tokenized Collateral Network said:
“TCN is a game-changer for how assets are used as collateral. By using blockchain technology, we can make the collateral process far more efficient and secure.”
TCN is a significant step towards a more efficient and secure financial future. By combining blockchain technology and traditional asset management, TCN is set to redefine how we understand and manage collateral in financial transactions.