Goldman Sachs is Among the First to Use JPMorgan’s Blockchain

By  //  July 2, 2021

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Goldman Sachs has finally begun using JPMorgan Chase’s proprietary blockchain technology for repo markets. This information was confirmed by JPMorgan’s high-rank executive in an interview with Bloomberg, that was published just a few days ago, on June 17.

Goldman Sachs exchanged a tokenized form of a US Treasury bond for JPM Coin, JPMorgan’s dollar-pegged stablecoin, in the deal. Last year, JPMorgan launched its own blockchain solution to improve the efficiency of repo transactions. JPM Coin is used on the platform to trade digital US Treasury bonds.

Goldman Sachs was one of the first financial companies to find the platform. In the year 2020, we have already heard confident feedback from executives of Goldman Sachs about JPMorgan’s blockchain-based repo-market service, saying that business blockchain has the potential to solve the current global financial system issue.

Repurchase or “repo” agreements are short-term financing arrangements for traders in government bonds, and they constitute a trillion-dollar market. Dealers can sell government bonds to investors and then buy them the next day at a slightly higher price via an overnight repo.

The deal, McDermott said, was a watershed event for the digitalization of transactional activity because, unlike the conventional repo market, the precise date of the transaction could be documented owing to blockchain technology.

According to McDermott, smart contracts on the blockchain enable collateral and cash to exchange simultaneously and instantly, which is a significant step forward for the repo market:

“We pay interest on a minute-by-minute basis. We are certain that this will alter the character of the intraday market.”

In early 2019, JPMorgan Chase announced the introduction of its own stablecoin, with an initial focus on international corporate settlements. The first exchanges took place in December, and since then, international businesses have adopted JPM Coin for round-the-clock cross-border payments.

Onyx, the bank’s version of the Ethereum blockchain, is currently handling more than $1 billion worth of transactions every day.

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