JPMorgan Uses JPMCoin to Execute Blockchain-Based Repo Transaction
Blockchain technology just got a major endorsement from one of the major finance players.
JPMorgan Executes Blockchain-Powered Repo Transaction Using JPMcoin
Wall Street titan JPMorgan on Thursday announced that it had executed a blockchain-enabled repo transaction using its JPMCoin. Notably, the announcement comes shortly after JPMorgan rebranded its blockchain unit – now called Onyx. The financial veteran said its stablecoin-like product had gone into production.
According to the release, the bank said that the use of distributed ledger technology (DLT) for the repo transaction roughly translates into an “atomic trade settlement.” Notably, the maturity of such a transaction takes hours and not days.
For the uninitiated, the repo rate is where the big banks go to borrow money from other banks to cover operating costs which are usually paid back in a day. Industry stalwarts can make good profits in such an arrangement by tapping the market inefficiency.
The banknotes in the press release:
“The repo market provides a widely used form of secured financing, however, current operational limitations prevent the meaningful use of such financing to meet intraday liquidity needs.”
“Using blockchain enables borrowers and lenders to execute shorter-term, intraday repo transactions with real-time, simultaneous transaction settlement, creating new ways to access intraday liquidity.”
Per sources close to the matter, JPMorgan aims to make its product available to other counter-parties in the near future.
Private Coins vs Public Cryptocurrencies
JPMorgan’s launch of the JPMCoin rivals that of Facebook’s launch of their privately-issued coin.
That being said, there are stark differences between the intended use-cases of both the digital coins. While JPMCoin is aimed toward conducting business transactions,
Facebook’s cryptocurrency has ambitions to replace fiat the world over and establish itself as the de-facto currency. Unsurprisingly, to date, it has faced severe backlash from regulators around the world, something that prompted the project to even rebrand itself to appease the financial watchdogs.
On the other hand, public cryptocurrencies such as bitcoin continue to witness wider adoption at a rapid pace.
As reported by BTCManager, major asset-manager Guggenheim Partners had hinted that it was seeking “investment exposure to bitcoin indirectly.”