How BlackRock Used Crypto To Complete Deal On JP Morgan’s Blockchain

Per a report from Bloomberg, the world’s largest asset manager, BlackRock, achieved a new milestone in its crypto roadmap. The company has been working on new ways to integrate with blockchain technology and thus has partnered with other financial institutions.

BlackRock Takes Another Step In The Crypto Space

According to the report, BlackRock completed a transaction on the derivatives market using Onyx, the blockchain platform developed by JP Morgan. The transaction “used tokenized collateral,” or digital versions of shares from one of the asset manager’s funds.

The asset manager used these tokens to settle a transaction with Barcles in an over-the-counter (OTC) trade. These operations occur between two parties, and the details regarding the price, order size, and other details remain hidden from the public.

Tom McGrath, Deputy Chief Operating Officer of the Cash Management Group at BlackRock, said:

Money market funds play an important role in providing liquidity to investors in times of high market volatility. The tokenization of money market fund shares as collateral in clearing and margining transactions would dramatically reduce the operational friction in meeting margin calls when segments of the market face acute margin pressures.

The report indicates that this transaction represents an essential contribution to the volume of Onyx. The blockchain developed by the banking institution still records a “tiny” trading volume compared to JP Morgan’s legacy platform.

Moreover, the transaction was settled “instantaneously” between the parties. A spokesperson for JP Morgan told Bloomberg that the operation could open a new world of possibilities for legacy financial institutions by allowing them to free up capital and increase efficiency across different markets.

Ed Bond, Head of Trading Services at JP Morgan, stated:

Institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading.

Crypto: An Alternative To The Dollar?

The legacy financial sectors have been looking for ways to integrate blockchain technology, Bloomberg claims, for over a decade. The technology can reduce costs, speed up transactions, and increase trading volume.

In particular, BlackRock has become an aggressive player in the crypto space. The asset manager holds a stake in the leading Bitcoin miners publicly traded in the US while pushing for the approval of the country’s first spot Bitcoin exchange-traded fund (ETF) and looking for ways to gain a stronger foothold in the nascent sector.

The initiative extends to top executives in the asset manager company. Its CEO, Larry Fink, called Bitcoin an “international asset class” with the potential to become an alternative to the US dollar.

As of this writing, Bitcoin (BTC) trades at $27,050 with a 2% loss in the last 24 hours.

Cover image from Unsplash, chart from Tradingview