Table of Contents
Fidelity International is tokenizing its money market fund (MMF) on JP Morgan's Ethereum-based blockchain network, Onyx Digital Assets.
The London-based firm, which is separate from US-based Fidelity Management and Research, used its funds transfer agent and its Tokenized Collateral Network (TCN) to facilitate the tokenization process.
BlackRock and Barclays are also part of JP Morgan's TCN, which is positioned between the collateral receiver and a collateral provider on the Onyx blockchain. In October, shares in BlackRock's MMF were tokenized through TCN and transferred to Barclays for collateral.
“Tokenizing our money market fund shares to use as collateral is an important and natural first step in scaling our adoption of this technology,” Stephen Whyman, Fidelity International's head of debt capital markets, said.
“The benefits to our clients and the wider financial system are clear; in particular, the improved efficiency in delivering margin requirements and reduction in transaction costs and operational risk.”
According to Markets Insider, the total value of on-chain real-world assets topped over $118 billion last year. Boston Consulting Group presented a "highly conservative" forecast of $16 trillion by 2030 and a bullish scenario of $68 trillion for the industry.
JP Morgan plans to expand its TCN tokenization initiatives to include equities, fixed income and a range of asset classes.
“Fidelity's participation in TCN brings its MMF units onto our network through tokenization, adding a new asset that is otherwise prohibitively complex to use across today's collateral landscape,” said Keerthi Moudgal, head of product at Onyx Digital Assets, JP Morgan.
Last week, news broke of Galaxy Digital tokenizing an 18th-century violin to use as collateral for a multimillion-dollar loan.
Once owned by Russian empress, Catherine the Great, the 1708 Stradivarius was bought at auction by Animoca Brands co-founder Yat Siu and is valued at over $9 million.
Galaxy offers loans through Galaxy Global Markets, with its average loan book hitting $664 million in March, but the antique loan represents its efforts to extend its offerings to the crypto crowd.
Blockhead
Speaking to Blockhead, XDC Network co-founder Atul Khekade, said, "With RWA now the 'in' thing, many projects are now including that as one of their many focus areas. For the XDC ecosystem, RWA has been at our core, even before it became a buzzword."
For XDC, the benefits of tokenization are clear. "By tokenizing the likes of trade finance receivables, US Treasuries and Gold, they become more readily accessible," Khekade said.
Ultimately it comes down to the power of the blockchain, which offers a resilient network for transactions. "An added advantage of the blockchain is that it is immutable and it also ensures that unlying assets are not double presented," Khekade explained. "In the case of trade finance, paper-based Bills of Lading mean that a single document can potentially be fraudulently presented multiple times for funding)."
