‘Tokenization Is the Killer App for TradFi’: JPMorgan

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JPMorgan (JPM), the largest U.S. bank in terms of assets, remains steadfast on its roadmap for tokenizing traditional financial assets, largely undeterred by the current market and regulatory uncertainly blighting the public cryptocurrency markets.

The bank has been doing a brisk trade (almost $700 billion of transactions to date) in short-term loans using the Onyx Digital Assets platform, a permissioned version of Ethereum, where clients can trade using tokens denoting ownership rights to U.S. Treasuries as well as using blockchain bank accounts, known as JPM Coin.

Among the clients known to be using the Onyx-based repo service are Goldman Sachs, BNP Paribas and DBS Bank. Others have recently gone live and there’s a pipeline of about 15 banks and broker-dealers who are looking to sign up, Tyrone Lobban, head of Onyx Digital Assets, told CoinDesk in an interview.

As the platform ramps up, the focus would next move to tokenizing assets that are traditionally hard to finance, like money market funds, and using them for collateral purposes, said Lobban. Further down the road, Lobban expects to be doing blockchain-based issuances of an even wider range of assets, including tokenization of private funds.

“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 everyone else involved with digital assets, the Onyx team has felt the sweeping chill of the ongoing bear market and the regulatory scrutiny that has followed the past year’s string of company collapses and bankruptcies.

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.”

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