JPMorgan launches Tokenised Collateral Network (TCN) powered by blockchain

JPMorgan introduces TCN: On October 11, JPMorgan introduced its proprietary blockchain-based tokenisation application known as the Tokenised Collateral Network (TCN), according to media reports citing Bloomberg. The inaugural trade on TCN involved asset management giant BlackRock.

The TCN functions as an application that enables investors to utilise assets as collateral. Through blockchain technology, investors can transfer ownership of collateral without necessitating changes in the underlying ledger.

In a notable public collateralised trade between JPMorgan and BlackRock, TCN converted shares of a money market fund into digital tokens. These tokens were then conveyed to Barclays Bank, acting as security for an over-the-counter derivatives exchange between the involved parties.

The initial internal trial of TCN was conducted by JPMorgan in May 2022, with a subsequent rollout for a host of clients and transactions now that TCN is live. The platform was designed to enhance and streamline the traditional settlement process through blockchain adoption, significantly boosting speed, security, and efficiency.

TCN unlocks capital to be used as collateral: JP Morgan

Tyrone Lobban, the head of Onyx Digital Assets at JPMorgan, underlined that the TCN platform unlocks capital for use as collateral in ongoing transactions, ultimately enhancing operational efficiency at scale. It allows the creation, transfer, and settlement of Tokenised traditional assets, enabling near-instantaneous movement of collateral, a significant advancement compared to earlier methods.

The blockchain platform facilitates client access to intraday liquidity via secured repo transactions using Tokenised collateral, reducing reliance on costly unsecured credit lines. External clients participating in blockchain trades have their own dedicated node for settling trades and accessing pertinent reports.

JPMorgan, once a critic of the decentralised world, has come a long way and is actively involved in testing and launching various blockchain and crypto-focused services to meet the burgeoning demand in the market. Notably, the bank utilised a blockchain-based solution to settle trades with Indian banks in June.