JPMorgan Chase Blockchain Head: Clients Interested in Tokenization of Traditional Finance, Not Cryptocurrencies

Tyrone Lobban, head of the blockchain division at JPMorgan, stated at the CCData Digital Assets Summit in London that "99.9%" of his conversations with clients are about tokenization of traditional financial instruments, rather than cryptocurrencies.

Customers Focused on Tokenizing Traditional Finance, Not Cryptocurrencies

According to a report by Decrypt, JPMorgan Chase & Co., which has been deeply involved in blockchain technology for many years, the head of its blockchain division, Tyrone Lobban, stated at the CCData Digital Assets Summit in London that "99.9%" of his conversations with clients are about tokenized forms of traditional financial instruments, not cryptocurrencies.

There is widespread discussion about how to tokenize traditional assets. Looking back over the past year, almost every bank, broker-dealer, or asset management company has been doing something on permissioned or public blockchains.

Bitcoin Resembles Stablecoins, Days of Massive Returns Are Over

When it comes to cryptocurrencies, Lobban attributed a recent string of industry bankruptcies to waning interest and stated that "some clients may not necessarily want to be involved at this point." He also mentioned the recent stability in Bitcoin's price, stating that the world's most popular cryptocurrency is now likely more like a stablecoin.

The days of massive returns on Bitcoin may have passed for a while!

Using Onyx to Avoid Regulatory Issues on Public Blockchains

JPMorgan Chase introduced its own Onyx blockchain network in 2020, as an early adopter of blockchain technology in traditional finance. They issued their own stablecoin, JPM Coin, anchored 1:1 to the US dollar, and used Onyx Digital Assets technology to facilitate the exchange of various types of digital assets.

Lobban mentioned that due to the current regulatory environment, U.S. banks wanting to use public blockchains face various bureaucratic obstacles and red tape. To circumvent this, JPMorgan Chase established Onyx, a private blockchain based on Ethereum.

While this means that the JPMorgan team can write smart contracts for public blockchains, Lobban still believes that cryptocurrencies lack interoperability.

Ultimately, what you might need is some sort of connection between these platforms or a broader layer one that financial institutions can actually interact with.

Reducing Costs and Ensuring Delivery with Smart Contracts

As an investment bank, JPMorgan Chase provides credit lines to its institutional clients. For some clients, this process may be too costly, as while JPMorgan's credit lines are free to use, borrowers still need to hold enough assets to prove to regulators that they can meet their obligations in times of stress or when the bank withdraws their credit lines.

Lobban stated that through Onyx, JPMorgan's clients can sign repurchase agreements (repos) in the form of tokenized Treasury bonds to provide collateral for borrowing. Clients can specify very concretely the duration for which they actually need the credit line, such as borrowing $1 billion within three hours or $500 million within five hours.

The highlight of this technology is that we can use smart contracts to ensure delivery and payment, converting assets into cash at the right time, and we can very precisely manage the terms of trade when all parties agree.

More about Onyx:

JPMorgan's Onyx Blockchain Unleashes Killer Apps for Traditional Finance

Lightning Trades for Traditional Banks? DBS Bank Completes Repo Transaction using JPMorgan's Onyx Blockchain Network

JPM Coin, More Stable Than Stablecoins, JPMorgan Ventures into Euro Market Besides Dollar