JPMorgan pulls off first live trade on public blockchain
JPMorgan Chase & Co. has successfully completed its first live trade on a public blockchain.
Through the trade, the multinational bank was able to issue tokenized $71,000. It was part of Singapore’s central bank’s pilot programs testing the use of decentralized finance (DeFi) in the banking sector. After that trade, JPMorgan traded it for the tokenized yen with Japan’s SBI Digital Asset Holdings.
It marks a major step towards entering the system that powers the world of cryptocurrencies and shows the potential for other global banks to follow in its footsteps.
Other banks such as DBS Bank Ltd., Standard Chartered PLC and HSBC Holdings Plc are also part of the pilot test rounds for JPMorgan’s live trading on a public blockchain.
This is not JPMorgan’s first use of blockchain technology to execute transactions.
On May 20, JPMorgan Chase used cryptocurrency tokens for security in traditional financial asset transactions for the first time.
Although the live trading transaction was not for cryptocurrencies, the infrastructure used to conduct the test was developed by crypto firm Polygon blockchain. JPMorgan used Polygon to make transactions on the Ethereum blockchain cheaper and a modified version of Aave, a major DeFi lending project.
Tyrone Lobban, head of Blockchain Launch and Onyx Digital Assets at JPMorgan, told Bloomberg, “today was the first step to show that we can actually trade on these public networks,” adding that “the future is really working towards scaling this pivotal moment.”
Prior to JPMorgan’s successful implementation of live trading, several other Wall Street institutions have explored the use of blockchain. Tests and research for companies to use the blockchain have been ongoing, especially for intraday repurchases – a kind of short-term loan in interest rate and margin trading.
However, today’s bets from the banks are usually based on private blockchains which needs users to be allowed to join.
According to Bloomberg, the use of public blockchains can eliminate challenges such as isolated or fragmented liquidity, which will give the public access to the infrastructure.
In the interview with Bloomberg, Lobban added, “we clearly see what is happening in the public space, and we can see how the innovation creates not only new ways of doing financial transactions, but also new types of products.”
He added that the bank plans to explore using other blockchain networks in the future.
In May, JPMorgan announced that the bank would use blockchain technology in the security settlement, and plans to expand to other asset types such as stocks and bonds, according to Bloomberg.
Two of the bank’s units use tokens of BlackRock money market fund shares as collateral for their private blockchains, allowing trading outside market hours.
To date, the bank has processed more than $300 billion in repo transactions using blockchain.
In addition to being used for derivatives, repo transactions, securities lending and other transactions, a blockchain-based security settlement will also expand the scope of tokenized security, giving investors a wider variety of assets to invest as security.
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