One of the world’s leading investment banks reports that it is testing blockchain to settle transactions outside of the institution’s standard business hours. The first trials have been declared a success.
Blockchain in traditional banking
JP Morgan Chase & Co is a global brand that needs no introduction. As reported by the Bloomberg news agency, on May 20, this bank conducted a pilot transaction in which two of the institution’s accessible entities transferred a tokenized unit of the Black Rock Inc. fund.
We are talking about a type of money fund defined as low-risk. It offers exposure to assets such as cash, cash equivalents and highly rated debt securities.
Black Rock itself has not acted here as a counterparty, but as a partner heavily involved in the initiative. It is worth mentioning that the institution was founded Onyx Digital Assets (ODA) in 2020. They call the initiative “a blockchain-based network that enables the processing, recording and exchange of Delivery-versus-Payment (DVP) digital assets across asset classes.”
JP Morgan’s ambitious goals
JP Morgan’s vision seems to be very clear. The bank intends to give investors exposure to stocks and securities outside of regular business hours as well.
Head of JPMorgan’s Blockchain Launch, Tyrone Lobban notes that the bank is trying to stay ahead of the curve so that traditional financial services can also be offered on blockchain technology:
“There’s going to be a growing set of financial activities that take place on public blockchain, so we want to make sure that we’re able to not only support that, but also be ready to provide related services.”
JP Morgan isn’t the only bank looking favorably toward blockchain
Another major bank is also expressing its high commitment to blockchain technology and its potential for implementing traditional financial services in this space. Christopher Korpi, managing director of BNP Paribas Global Markets, was tempted to make this statement:
“Onyx tokenized and digital assets will allow for precise management of intraday liquidity. As such, they can be instrumental in enhancing collateral liquidity, securities settlement and ultimately reducing systemic risk by reducing intraday credit. Onyx Digital Assets will further enhance intraday USD convertibility.”
The statement seems to be a clear signal that banks recognize that moving with the times is essential to staying competitive. With major market players testing this type of solution, one can assume that it will soon become commonplace.