The days of big banks refusing to trade digital tokens are almost over. The proof, the banking giant BNP Paribas decided today to join the Onyx blockchain of JPM. This means that banking institutions are starting to pay more attention to the cryptocurrency market.
BNP Paribas chooses JP Morgan’s Onyx blockchain
Regarding the Onyx blockchain, it deals with the market for daily repurchases or repo (Repurchase Agreement). This market is valued at approximately $12 trillion. Since 2020, year of launch ofOnyxthere can be up to $300 billion worth of intraday repo transactions.
Recently, BNP Paribas took the plunge to join the Onyx blockchain network. The European banking giant is now trading digital tokens on the network, but only for short-term asset lending. Its competitor, Goldman Sachs (GS), has already been using JP Morgan’s network for repo trading since last June.
Thus, banks are authorized to lend symbolic US Treasury bonds. The loan is made in the very short term, for a few hours only and the assets do not leave their balance sheets. This facilitates and optimizes the management of liquidity demands imposed on institutions following the stock market crisis of 2008.
Investors can then exchange the tokens for cash. Be aware that Onyx uses JP Morgan’s digital payment token: the JPM Coin.
What to know about JP Morgan
Jamie Dimon is at its head and the latter is not really a fan of Bitcoin. He even supported the idea and the slogan of the institutional actors who decried cryptocurrencies in 2018. At that time, their slogan was “ blockchain, not bitcoinand Jamie Dimon shared the same opinion. Just like the others, he viewed Bitcoin as an asset” without value “. Therefore, the fact that JP Morgan Asset management is adopting blockchain has somewhat surprised investors.
Nevertheless, JPM Coin is quite different from Bitcoin or Ethereum in a few major ways. First, unlike JPM Coin, Bitcoin and Ethereum are decentralized public networks. As a result, they are accessible to all investors with the necessary equipment. As for JP Morgan, they have absolute control over what validates Onyx transactions. Then, he selects the institutions that have the right to access his network.
In August 2020, JP Morgan developed and then sold Quorum to Ethereum major ConSensys. Quorum is an open source enterprise blockchain platform. On the surface, JP Morgan is skeptical of the evolution of cryptocurrencies and decentralized public networks. But basically, we see that JP Morgan is slowly making inroads into cryptocurrency. The proof is that it is already starting to allow its wealthy clients to access a few crypto funds including a Bitcoin fund. JP Morgan also made a strategic investment in TRM Labs, a blockchain analytics company based in San Francisco.
In short, the second largest banking group in Europe, BNP Paribas finally joins the blockchain network of JP Morgan. For its part, JP Morgan, with Jamie Dimon at its head, is gradually but inevitably moving towards the cryptocurrency market.
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Interested in investment and financial markets after a business school in Chambéry, the passion for cryptocurrencies was obvious. The blockchain is surely the universal tool of tomorrow.