NEW YORK–JPMorgan Chase & Co is reporting it has conducted its first live trade on a public blockchain. It is a demonstration of a technology credit unions are increasingly being told will change everything in finance from the financial transactions to crypto to automobile titles to mortgage deeds.
Through the trade, the JPMorgan Chase was able to issue tokenized $71,000 as part of the Singapore central bank's pilot programs that are testing the use of decentralized finance (DeFi) in the banking sector, according it to Blockchain News. Following that trade, JPMorgan traded it for tokenized yen with Japan's SBI Digital Asset Holdings.
“It signifies a big step towards entering the system that operates the world of cryptocurrencies and showcases the potential for other global banks to follow in its footsteps,” Blockchain News reported, noting other banks are in pilot tests of the technology.
Other banks such as DBS Bank Ltd., Standard Chartered PLC and HSBC Holdings Plc are also part of the pilot testing rounds for JPMorgan's live trade on a public blockchain.
The latest move was not JPMorgan's first use of blockchain technology to conduct transactions. In May, the bank used cryptocurrency tokens for collateral in traditional financial asset transactions for the first time, the report added.
The Infrastructure
“Even though the live trade transaction was not for cryptocurrencies, the infrastructure used to execute the test was developed by crypto firm, the Polygon blockchain,” Blockchain News reported. “JPMorgan used Polygon as it makes 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 toward scaling this pivotal moment."
Most current efforts by banks are typically based on private networks that need users to receive permission to join.
Eliminating Challenges
According to Bloomberg, the use of public blockchains can eliminate challenges such as isolated or fragmented liquidity, which will provide the public access to the infrastructure.
In May, JPMorgan also announced that the bank would use blockchain technology in the collateral settlement, planning to expand to other asset types such as equities and fixed income, according to Bloomberg.
In addition to being used for derivatives, repo transactions, securities lending, and other transactions, a blockchain-based collateral settlement will also expand the application scope of tokenized collateral, providing investors with a wider variety of assets to invest as collateral, the report added.
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