BNP Paribas, the second largest banking group in Europe is currently trading toke on JPMorgan’s blockchain network for short-term asset lending.
JPMorgan’s Blockchain, Onyx Digital Assets, launched in December 2020 and has so far processed more than $300 billion in government bond transactions, according to a report from the Financial Times.
For now, Onyx deals specifically with the intraday repurchase (repo) market, which is valued at around $12 trillion. Banks can lend tokenized US Treasurys for a few days at a time without the assets leaving their balance sheets. This helps navigate liquidity demands imposed on institutions in the wake of the 2008 financial crisis. Borrowers can then exchange the tokens for liquid cash, boosting their available collateral for use within derivatives markets. Onyx is integrated with JPMorgan’s own digital payments token, JPM Coin, which debuts around the same time as its blockchain platform.
Transactions on the blockchain network are currently being settled by automated smart contracts. Onyx’s website is proud that the service allows for “near instant exchange of collateral for cash.” Repo transactions can be “transacted, settled and matured in days” and trading terms can be reached in just a few minutes.
Onyx’s private blockchain technologies are very different from Bitcoin and Ethereum, as they are non-public networks. Anyone can join and use private blockchain as an authenticator or regular user, while JPMogrgan can control who authenticates Onyx transactions and ultimately decide which organization can access its network.
At present, BNP Paribas is one of the group of banks testing blockchain projects authorized by the French central bank.
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