BlackRock And JPMorgan Chase Use Blockchain To Create Financial Asset Tokenization

Leading investment banks in the world, BlackRock and JPMorgan use blockchain. (Photo; Doc. Yahoo Finance)

JAKARTA - In an important breakthrough, two leading investment bank giants BlackRock and JPMorgan Chase recently engaged in collateral transactions involving financial asset tokenization through JPMorgan's decentralized application, known as the Tokenized Collateral Network (TCN).

In the transaction, BlackRock used TCN to convert shares in one of their mutual money market funds into tokens. These tokens are then used as collateral for over-the-counter (OTC) derivative trade between BlackRock and Barclays, another financial institution involved in this transaction.

What is TCN?

TCN is a personal blockchain application operating on the Onyx Digital Assets platform owned by JPMorgan. This app creates the first guarantee solution for the client's direct OTC derivative transaction. This allows users to use the mutual shares of money market funds as collateral without the need to exchange them for cash.

According to JPMorgan, the ability to use the mutual exchange of money market funds as collateral without exchanging it for cash brings greater efficiency and stability, especially when the market is under pressure. In other words, this allows for a more efficient turnover of liquidity.

Ed Bond, head of trading services JPMorgan, revealed that TCN is an overview of future investment in the collateral market. He also highlighted the huge potential of tokened assets.

Transactions between BlackRock and Barclays also show tremendous efficiency. The process of colateral delivery between the two companies only takes one second, which is in stark contrast to the few days that may be needed in conventional proceedings. This makes it the "first" in blockchain-based applications used in this kind of transaction.

Asset Tokeniasation

Financial asset tokenization has become a trend in the financial industry. This is the practice of converting physical or financial assets into trading digital tokens. BlackRock CEO Larry Fink even called security tokenization the "next generation to the market."

Dalam perkembangan terkini, BlackRock telah mengejar tokenisasi saham mutual dana pasar uang sebagai salah satu inovasi di pasar keuangan. Bidik global telah menunjukkan minat pada fitur-fitur seperti ini, meski mungkin tidak selalu memperhati memperhatikan bahwa itu melibatkan teknologi blockchain.

Transactions like this create great opportunities to increase efficiency in the financial market and reduce operational barriers. Tokenization of money market mutual funds as collateral in clearing and margin transactions, as seen in transactions between BlackRock, JPMorgan, and Barclays, can significantly reduce operational barriers when the market is experiencing high margin pressure.

In the end, this kind of transaction marks an important breakthrough in the convergence between traditional finance and the crypto world. Financial asset tokenization is increasingly seeping into the conventional financial sector, paving the way for major changes in the way financial transactions are carried out in the future.