JP Morgan Adopts Blockchain for Collateral Settlements
JP Morgan Chase and Company is starting the use of blockchain for collateral settlements.
On May 26, Bloomberg acknowledged the information that JP Morgan has been using blockchain technology for collateral settlements for its company JP Morgan Chase. The information came to the limelight when two companies shared the Tokenized Collateral of Blackrock Inc‘s money market fund’s shares. At this stage, it can be classified as a trial but the news of a big financial giant using blockchain technology can be a very good sign in a bear market.
What is Tokenized Collateral and why JP Morgan is using it?
Tokenized collaterals are the encrypted form of financial instruments that can be used as collaterals. These collaterals are embedded in a Smart contract which acts as a neutral third party. Since a smart contract is totally unbiased and the factors which are used for its execution can be set before the parties enter into a contract, it can act as a trusted element in a financial transaction. These smart contracts cannot be edited once they are created which serves to eliminate the risk of default by either party.
Other Financial Giants using Blockchain
Apart from JP Morgan, many financial institutions, banks, and companies are actively experimenting the blockchain technology across the world.
- People’s Bank of China launched its CBDC, the eCNY. On 25 April 2022, it reached 260 million wallets.
- The Reserve Bank of India intends to launch Digital Rupee on the Blockchain as said in the Budget Documents and various press releases.
- Morgan Stanley started to offer Bitcoin to its clients.
- BNP Paribas invested in a crypto startup called Curv.