- Banking giant BNP Paribas has joined JPMorgan’s Onyx blockchain
- The Onyx platform allows banks to collateralize Treasuries as tokens and lend them for short periods
- Banks are more frequently turning to blockchain technology to modernize the $12 trillion market
Ever since the promise of blockchain was thrust into the limelight in 2017, much has been written of its potential and, following the 2018 bear market, how it was all hype and no substance. However, the banking giant BNP Paribas has now joined JPMorgan’s Onyx blockchain to tokenize short-term trading in fixed-income markets as part of a process to modernize the $12 trillion market with blockchain technology.
JPMorgan’s Blockchain Pedigree
JPMorgan has of course been a very pro-blockchain company for some years, having launched its blockchain-based Interbank Information Network (IIN) blockchain in 2017 and a proprietary coin, JPM Coin, in 2019 to facilitate transfers on the blockchain.
JPMorgan launched Oynx in December 2021 and has already attracted more than $300bn of deals, a figure that will now surge thanks to BNP Paribas being involved.
Onyx Allows Tokenization of Treasury Bonds
JPMorgan’s Onyx blockchain allows banks to lend out US government bonds for a short while as collateral, often just a few hours, without the bonds leaving their balance sheets.
Each token on the Onyx blockchain represents a digital version of a Treasury which borrowers can exchange for cash. By tokenizing assets in this way, banks can temporarily collateralize them for a short period without lowering their safety buffers, ensuring they remain within regulations.
Regulations imposed in the wake of the 2008 financial crash demand that banks hold large amounts of liquid assets, such as Treasuries, as a safety buffer that can be bought and sold easily, even during times of market stress.