Fidelity International tokenises money market fund on JPMorgan’s blockchain

Fidelity International, a London-based fund management firm, has tokenised shares in a money market fund for the first time through JPMorgan’s Ethereum-based private blockchain network, Onyx Digital Assets.

As reported by CoinDesk, tokenisation was completed in near real-time through the integration of the fund’s transfer agent (JPMorgan’s transfer agency business) with the Tokenised Collateral Network (TCN), an application that links collateral receivers and providers using JPMorgan’s Onyx blockchain.

While tokenisation is not a novel concept, it has been a key objective for JPMorgan since the inception of its blockchain program in 2015. The subsequent release of Quorum, its permissioned fork of the Ethereum code, has further emphasised this focus. The bank’s Onyx Digital Assets platform, which settles transactions using the tokenised fiat JPM Coin, has facilitated over $900 billion in transactions since going live a few years ago, albeit a small fraction of the bank’s daily $8 trillion payment volume.

Tokenisation simply means using blockchain technology to create digitised investment vehicles representing any type of real-world asset, including the real estate, gold, collectibles, stock, and bonds. Banks have made tokenising traditional financial assets a priority, and JPMorgan has been leading the race.

Another digital asset initiative: This is not the first time Fidelity International has been involved with digital assets, having embarked on a tokenisation project with Swiss bank Sygnum back in March.

In October 2023, JPMorgan completed its inaugural live blockchain-based collateral settlement, transferring tokenised shares from a BlackRock money-market fund to Barclays as collateral for an over-the-counter derivatives transaction.

Banks are offering the ability to tokenise traditional financial assets, which reflects what is happening in the rest of the market. Originating at JPMorgan, this movement has also prompted other institutions such as Citi to join the expanding financial rush into this space.

The entire tokenisation process was completed in minutes, which JPMorgan attributes to the seamless link between the fund’s Transfer Agent and TCN. It was the first trade of its kind for both funds, demonstrating the practical utility of an MMF share as collateral in derivative trades. The transfer from BlackRock to Barclays was immediate.

BlackRock has further embraced tokenisation through its public-facing BUIDL project with tokenisation services firm Securitize.

Stephen Whyman, Fidelity International’s head of debt capital markets, stated, “Tokenising our money market fund shares to use as collateral is an important and natural first step in scaling our adoption of this technology. 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.”

It kicked off with the tokenisation of money market fund shares, conservative mutual funds that invest in high-quality, short-term debt instruments and cash equivalents, under the leadership of JPMorgan’s TCN. The bank intends to expand into equities, fixed income, and a variety of other asset classes.

Expanding on this, Keerthi Moudgal, head of product at Onyx Digital Assets, JPMorgan, commented, “Fidelity’s participation in TCN brings its MMF units onto our network through tokenisation, adding a new asset that is otherwise prohibitively complex to use across today’s collateral landscape.”

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Tags: blockchain, cryptocurrency, Ethereum

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