JPMorgan, a global finance behemoth, has announced using a blockchain-enabled repo transaction through its crypto token JPMCoin on Thursday, last week.
The blockchain-based intraday repo trade transactions completed in hours and not days, says the bank.
JPMorgan Executes Blockchain-Based Repo Transaction Using JPMCoin
The bank published a press release and highlighted that it successfully executed a live blockchain-backed intraday repo transaction between broker-dealers and banking entities. The new technology enables lenders and borrowers to do short term transaction with the fast settlement. The transactions were facilitated using the JPMCoin for collateral in exchange.
JPMorgan said that the distributed ledger technology would be used for the repo transactions speeding the process like Atomic trade settlement that happens in a few hours. JPMorgan executed the repo trade with its in-house blockchain called Onyx, which went live recently. Through the intraday repo transactions run on the blockchain, the settlement was done instantly.
The process created novel and faster ways to assure intraday liquidity as it was able to swap digitized US treasury bonds for the JPMCoin- a cryptocurrency pegged on USD.
As the traditional repo market faced technical difficulties and is not abreast with the latest advancements in the financial sector, the bank recognized that blockchain technology would be instrumental in decreasing the intraday risk profile for its clients.
The bank incorporated blockchain technology to create better liquidity. The blockchain-based solution helps the bank to streamline its processes and speedily the repo settlement. The blockchain-enabled platform would substantially help the bank to augment its business. The blockchain unit of JPMorgan bank is aimed to promote the technology and financial products offered by the company and promote the JPMCoin.
Blockchain technology is garnering a lot of attention from financial institutions as it streamlines, quickens, and enhances settlement and trading activities. JPMorgan is thriving to explore the space with its Onyx Business unit.
“This is an exciting project which vividly highlights where enterprise blockchain can address a real-world problem in the financial system, and we look forward to going live in early 2021,” Mathew McDermott, The Goldman Sachs Global Head of Digital Assets.
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