Financial giant J. P. Morgan has unveiled its new blockchain-based tokenization platform in a bid to create a faster, more secure and more efficient market. The Tokenized Collateral Network (TCN) was used by investment company Blackrock to convert shares from one of its money market funds into digital tokens, which were then transferred to Barclays Plc as security for an over-the-counter derivatives exchange.
The event, which was covered by Bloomberg, is not the first time we’ve seen significant interest in blockchain technology by financial institutions in recent news as just last month LSE Group was reported to be moving forward with a blockchain-based financial assets trading platform. In fact, whilst blockchain-solutions experienced a lull a few years ago, there now seems to be a resurgence of significant institutions involved with new blockchain platforms (see Forbes’ list of 50 companies investing in blockchain). Given the size and influence of the companies involved, it seems that wider adoption of blockchain-based solutions is imminent.
J. P. Morgan describes the TCN as ‘an application enabling investors to utilize assets as collateral. Transfer collateral ownership without moving assets in underlying ledgers — while remaining invested — starting with money market funds.’ Not only does this create opportunities to use previously-unavailable assets as collateral, but the nature of the blockchain it’s built on ensures a bevy of attractive qualities from its use, including transparency, automation, improved settlement times, reduced costs and tokenization options.
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By Matthew Warner