U.S. banking giant JPMorgan Chase launched its internal blockchain-based tokenization application, the Tokenized Collateral Network (TCN), on October 11. according to to Bloomberg. TCN closed its first deal for asset management giant BlackRock.
The Tokenized Collateral Network is an application that allows investors to leverage assets as collateral. Using blockchain technology, investors can transfer ownership of collateral without moving the assets in the underlying ledger.
In the first public staking deal between JPMorgan and BlackRock, TCN converted shares of a money market fund into digital tokens and then transferred them to Barclays as an over-the-counter derivative between the two companies Guarantees for commodity transactions.
JPMorgan conducted the first internal test of TCN in May 2022, and now TCN is live with a range of other customers and transactions. TCN was launched to simplify and expand the process of traditional settlement on the blockchain. The use of decentralized technology makes this process faster, safer and more efficient.
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Tyrone Lobban, head of digital assets at JPMorgan Onyx, said the new TCN platform frees up capital and allows it to be used as collateral in ongoing transactions, thereby increasing efficiency on a large scale. The platform supports the creation, transfer and settlement of tokenized traditional assets. Unlike earlier methods, it also allows for almost instant movement of collateral.
The blockchain platform allows clients to access intraday liquidity through secured repo transactions using tokenized collateral, rather than relying on expensive unsecured credit lines. External clients who agree to blockchain transactions have their own node where they can settle transactions and access other reports.
The US banking giant has come a long way from its early days as a critic of the decentralized world and is now actively involved in testing and launching various blockchain and cryptocurrency-centric services amid growing demand. In June, the bank used a blockchain-based solution to settle transactions with Indian banks.
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