Tokenization Is 'Killer App' for TradFi: JPMorgan

JPMorgan Chase (JPM), the largest U.S. bank in terms of assets, remains steadfast in its plan to "tokenize" traditional-financial assets, largely undeterred by the crypto bear market and regulatory uncertainty.

The bank has processed almost $700 billion in transactions in short-term loans using its Onyx digital-assets platform, a permissioned version of the Ethereum blockchain, where customers can trade tokens that denote ownership rights to U.S. Treasurys as well as use blockchain bank accounts known as JPM Coin.

Among the clients known to be using the Onyx-based repo service are Goldman Sachs (GS), BNP Paribas and DBS Bank. Fifteen more banks and broker-dealers are looking to sign up, Tyrone Lobban, head of Onyx, told CoinDesk in an interview.

As the platform ramps up, Onyx will focus on tokenizing assets that are traditionally hard to finance, such as money-market funds, and will use them as collateral, Lobban said. Further down the road, Lobban expects Onyx will issue a wider range of blockchain-based assets, including private funds.

Read More: U.S. Banking Crisis May Be Vindication for Crypto Ecosystem: JPMorgan

“We think that tokenization is a killer app for traditional finance,” Lobban told CoinDesk. “If you think about private markets – private credit, private equity and private real estate – they are pretty much double the size of public markets, but many orders of magnitude less liquid, so there’s this huge disparity."

Like others in the crypto sector, the Onyx team has felt the effects of the bear market and greater regulatory scrutiny following the collapse of many major crypto firms.

While acknowledging the need for additional caution, Lobban stressed that nothing has materially changed for JPMorgan and Onyx.

“The timing might be a little bit longer than what it was before, but our strategy hasn’t changed at all,” Lobban said. “In any case, there’s so much work to do that these kinds of momentary lows are really very minor over the long term. We’re lucky to have the resources to be able to actually deliver on these very big use cases, and if we can help bring more clarity to regulators and help them understand the value, then that’s only a good thing as well.”