Fidelity International Joins JPMorgan's Blockchain-Based Tokenized Collateral Network

In an exciting development for the world of digital assets and traditional finance, Fidelity International has joined JPMorgan's Tokenized Collateral Network (TCN). This move demonstrates the growing interest and adoption of blockchain technology by major financial institutions.

What is the Tokenized Collateral Network? 

JPMorgan's TCN is a private blockchain network built on Ethereum. It enables the tokenization of various financial assets to be used as collateral. The network started with the tokenization of money market fund shares, with plans to expand to other asset classes like equities and fixed income securities.

Fidelity International's Participation 

As part of joining TCN, Fidelity International has tokenized shares of its money market fund. This allows those shares to be posted as collateral directly, without first having to convert them to cash. The firms believe this could lead to greater efficiency and market stability, especially during times of stress.

Benefits and Potential 

Using tokenized assets as collateral, through both title transfer and pledge arrangements, opens up new possibilities in the collateral market. Transactions can be executed outside of normal market hours. Onyx Digital Assets, which powers TCN, sees Fidelity's participation as an important milestone that adds a valuable new asset type to their network.

Fidelity International's Perspective 

For Fidelity International, tokenizing fund shares to use as collateral is a significant first step in expanding their use of blockchain technology. They see clear benefits in terms of improved efficiency in managing margin requirements, reduced transaction costs, and lower operational risks. This aligns with the broader trend of major asset managers exploring tokenized funds.

The Bigger Picture 

Fidelity International's move comes amid growing interest in onchain money market funds from other large players like Franklin Templeton and BlackRock. As more traditional financial giants wade into the world of digital assets, blockchain-based infrastructure like JPMorgan's TCN could play an increasingly important role in bringing efficiencies to collateral markets and beyond.

While there is still a long way to go before tokenized assets become mainstream in capital markets, developments like Fidelity International joining TCN show that the intersection between TradFi and DeFi continues to deepen. Expect to see more headline-grabbing partnerships and initiatives at this frontier in the coming months and years.