Fidelity International has chosen JPMorgan’s Onyx Digital Assets blockchain to tokenize a money market fund, leading to improved efficiency in delivering margin requirements along with a reduction in transaction costs and operational risk. Tokenization of shares in the money market fund was done near instantaneously through connectivity between the fund’s transfer agent and Tokenized Collateral Network on JPMorgan’s private blockchain network. This move showcases the importance of tokenizing traditional financial assets for banks, which has been a priority for JPMorgan for some time. Stock, bonds, real estate, precious metals, and collectibles are all potential assets that can be tokenized on a blockchain.
In 2019, Fidelity International worked on a tokenization project with Swiss bank Sygnum, showcasing its long-standing history with digital assets. JPMorgan also completed its first live blockchain-based collateral settlement transaction in October last year involving tokenized shares in a BlackRock money-market fund, further highlighting the push towards tokenization in the financial industry. BlackRock has since embraced tokenization through its BUIDL project in collaboration with Securitize. Fidelity International’s decision to tokenize money market fund shares as collateral is seen as a crucial first step in adopting blockchain technology to benefit clients and improve efficiency in the financial system.
Stephen Whyman, Fidelity International’s head of debt capital markets, emphasized the clear benefits of tokenization, including improved efficiency in delivering margin requirements, reduced transaction costs, and mitigated operational risks. JPMorgan’s TCN initially focused on tokenizing money market shares but plans to expand to equities, fixed income, and various asset classes in the future. Keerthi Moudgal, head of product at Onyx Digital Assets, JPMorgan, stated that Fidelity’s participation in TCN brings MMF units onto the network through tokenization, making it easier to use as collateral due to its complexity in the current collateral landscape.
Overall, Fidelity International’s decision to tokenize a money market fund using JPMorgan’s blockchain network signifies a significant milestone in the adoption of blockchain technology in the financial industry. Tokenization of traditional financial assets is becoming increasingly popular among banks, with JPMorgan leading the way in this area. The collaboration between Fidelity International and JPMorgan showcases the potential for blockchain technology to improve efficiency, reduce costs, and mitigate operational risks in the financial sector. As more companies embrace tokenization, the financial landscape is set to undergo transformation, offering new opportunities and advantages for investors and participants in the market.
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