As companies race to adopt blockchain technology, JPMorgan is experimenting with using it for collateral settlements.
Despite being synonymous with cryptocurrency, blockchain has applications far beyond bitcoin and company. Thanks to its decentralized and immutable nature, financial institutions are eager to find ways to incorporate it in their operations. JPMorgan is looking to blockchain to handle collateral settlements, handling its first transaction on May 20.
According to Bloomberg, two of JPMorgan’s entities used the token representation of money market fund shares from BlackRock as collateral, transferring it on its private blockchain. The company sees an opportunity to give investors more flexibility with the kind of assets they can use for collateral, as well as when they can use them.
“What we’ve achieved is the friction-less transfer of collateral assets on an instantaneous basis,” Ben Challice, JPMorgan’s global head of trading services, told Bloomberg in an interview. Interestingly, despite BlackRock not being a counterparty, “they have been heavily involved since Day One, and are exploring use of this technology.”
JPMorgan has been blazing a trail in the financial world, being among the first to embrace new technologies. The company recently opened offices in the metaverse, becoming the first major bank to do so. With its use of blockchain, JPMorgan is continuing to innovate and embrace the changes new technology is bringing.