JPMorgan, one of Wall Street’s leading investment banks, is continuing to push for the tokenization of traditional financial assets despite last year’s market downturn. According to Tyrone Lobban, the head of JPMorgan’s digital asset and tokenization platform Onyx, the bank has already processed nearly $700 billion in short-term loans on Onyx, with more to come.
Lobban believes that tokenization is a “killer app for traditional finance.” He explains that private markets such as private credit, private equity, and private real estate are double the size of public markets but far less liquid. This creates a huge disparity that tokenization can help to bridge.
Setbacks in the Crypto Market and Regulatory Crackdowns
Despite the optimism surrounding the future of tokenization, Lobban admits that the Onyx team has felt the effects of the crypto market downturn and regulatory crackdowns. He concedes that things may take longer than expected to play out. However, Lobban remains confident that these momentary lows are relatively insignificant in the grand scheme of things.
JPMorgan’s strategy for tokenization remains unchanged, and Lobban believes that the setbacks mean very little over the long term. He adds that the bank is lucky to have the necessary resources to deliver on these big use cases. Furthermore, if JPMorgan can help regulators understand the value of tokenization, it will only be a good thing.
Onyx and JPM Coin
Onyx is a permissioned version of the Ethereum blockchain developed by JPMorgan for use between different banking partners. The platform has been primarily used to make transactions in the repo market, where institutions can borrow assets for short-term financing needs. Goldman Sachs, BNP Paribas, and DBS Bank are among the banks that have joined JPMorgan on the platform, while several others are considering signing up.
In addition to Onyx, JPMorgan is known for launching its own centralized digital token known as JPM Coin in 2019. Despite the setbacks, JPMorgan remains committed to its tokenization plans and believes that tokenization is the future of traditional finance.