For many, the ups and downs of cryptocurrencies have had too much of an impact on perceptions of the technology underpinning this nascent asset class: DLT and blockchain technology.
For those of us who are interested in technology, what is happening with cryptocurrencies is irrelevant to our plans. What can be achieved with shared ledgers and tokenization is more than guessing the price, and if there is one big company that knows this better than anyone, it is JP Morgan.
I recently spoke with Tyrone Lobban, Head of Blockchain Launch and Onyx Digital Assets at JP Morgan. Tyrone has been involved with blockchain since the early days of JP Morgan. In our discussion, there were many important lessons about how JP Morgan positions himself to succeed with regards to his web3 and future.
Preparing for the long road ahead
JP Morgan has been investing in blockchain applications in business since 2015. Over the past seven years, they have completed over 60 proof-of-concepts focused on internal and external client initiatives.
I don’t know of any other large company that has shown this level of commitment to blockchain over the past seven years and continues to do so.
Key announcements made during this period include:
In 2016, they first made headlines with the official announcement of Quorum, an enterprise-focused fork of Ethereum.
In 2020 they launched their platform Onyx Digital Assets, processing over $300 billion of intraday repo trades (more than three-quarters backed by government bonds).
In 2022, as part of Monetary Authority of Singapore’s Project Guardian, we used DBS Bank to make DeFi transactions on the public Polygon blockchain.
JP Morgan is the world’s largest bank outside of China and continues to be $1 billion per day on blockchain.
This level of investment and commitment overwhelms what many other organizations are doing. Many are still exploring potential applications through proof-of-concept, but much work is still needed to bring these to market.
steel sharpens steel
JP Morgan recognizes that not all projects succeed, but ultimately it’s a numbers game. As with any skill, the more you practice, the better you get. JP Morgan has now come to the point of identifying some major use cases where blockchain makes sense, as well as use cases where it doesn’t. t.
This ongoing experiment is important for understanding how the best blockchain technology can benefit your organization. You’ll learn a lot that will help you become more effective at
Uncertainty should not be an obstacle
There are still many uncertainties about how the web3 landscape will evolve. Public blockchains are still criticized for lack of privacy, pseudo-anonymity of participants, and performance.
Conversely, private blockchains have been criticized for governance overheads, onboarding challenges, and isolation from public blockchains.
In response to this situation, JP Morgan decided not to postpone acting. Instead, they were able to identify ways in which the current situation could serve their needs.
They tokenized deposits, ran DeFi transactions on public networks, and introduced a decentralized identity implementation into the project to identify all participants in the transaction.
This work was conducted in a regulatory-sanctioned sandbox environment, which helped identify the regulatory challenges that exist in the current legal framework that supports such activities.
On the private network side, given the challenges that exist in working with public networks, we launched the Onyx platform using a private permissioned network.
By being at the forefront of these developments, JP Morgan is able to assist regulators in enacting legislation where necessary, and to respond quickly to regulations as they emerge to ensure compliant products and services. can put you in a better position to create
We need a whole new ecosystem
Once a framework is established that will allow banks to tokenize their deposits, based on our experience so far, JP Morgan will undoubtedly be a pioneer in this space.
An asset tokenization initiative could influence many other ecosystem initiatives of banks. For example, it was recently revealed that JP Morgan has registered a trademark for a cryptocurrency wallet. Unsurprisingly, it’s called the JP Morgan Wallet. JP Morgan hasn’t announced the wallet itself, but it presents a significant opportunity for easy expansion given its existing reach and customer base.
In addition, their Onyx platform hosts not only repo transactions, but also the Liink network, where over 100 participants use the network to exchange payment-related information with each other, reducing the time it takes to make interagency payments. increase.
JP Morgan is definitely involved, and there are many other initiatives that will be published in due course. But I have no doubt that many will benefit from following their lead.
JP Morgan has a strong track record in financial services and will very likely continue to maintain its market leadership position as blockchain technology becomes more mainstream.