The Tokenised Collateral Network (TCN) is a game changer in the world of blockchain-based financial transactions, improving efficiency, security and liquidity.
JPMorgan Chase & Co, the largest bank in the US, has gone live with its first collateral settlement for clients using blockchain, according to a report by Bloomberg.
The platform, known as the Tokenised Collateral Network (TCN), is a blockchain-based collateral settlement application which facilitates the tokenisation of collateral within minutes.
Tokenisation refers to the process of converting traditional or physical assets into digital assets. It’s a method of improving transaction efficiency, security and liquidity.
The first transaction on the TCN involved asset giant BlackRock Inc, and Barclays Plc.
BlackRock turned shares in one of its money market funds into digital tokens, which were transferred to Barclays Plc as collateral for an OTC (over-the-counter) derivatives trade between the two institutions, Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, told Bloomberg.
The transfer marks a historic achievement in the world of blockchain-based financial transactions. Unlike traditional methods, the TCN lets institutions move collateral near instantaneously, opening the doors for hugely improved market efficiency.
Lobban said, “Onyx Digital Assets already enables clients to access intraday liquidity via repo transactions. Now with the launch of TCN, clients can benefit from additional utility from their MMF investments by posting tokenized MMF shares as collateral – a faster, more cost-effective way of meeting margin requirements.”
JPMorgan first tested the TCN in May 2022.
Crypto has been on JPMorgan’s agenda for some time: back in 2019, the institution launched JPM Coin, a permissionless, Ethereum-based token system that can be used to settle transactions outside of standard hours. It’s pegged 1:1 to the US dollar.
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