BlackRock, JPMorgan Tap Stablecoin Firms To Being Treasury Reserves On-Chain
Highlights
- BlackRock and JPMorgan Chase are aiming at stablecoin reserve markets with tokenized Treasury funds.
- Ethereum is taking the lead in the tokenized Treasury sector valued at $13.9 billion, overtaking BNB Chain.
- BlackRock plans to put ownership records for a Treasury fund on-chain using BNY infrastructure.
Blockchain finance keeps gaining traction on Wall Street as tokenized money market funds come as a potential reserve asset to the stablecoins issuers. On-chain analytics service Token Terminal indicates that companies like BlackRock and JPMorgan Chase are preparing tokenized treasury products. The catch is that these products emerge as a substitute to part of the off-chain reserves that are currently used to back stablecoins.
Wall Street Giants Move Ahead With Tokenization
The change is in response to the GENIUS Act’s passing. For context, this legislation paved the way for stablecoin firms to keep tokenized money market funds as reserves. The switch has led to rivalry among traditional financial institutions aiming to share in the on-chain Treasury market.
According to a report from Token Terminal, the tokenized U.S. Treasury market is valued at approximately $13.9 billion. Ethereum leads the market with more than 50% of overall activity, followed by BNB Chain with more than 20%. Ethereum’s dominance on the network will further improve as it already has the most stablecoins and the greatest number of tokenized Treasury offerings.
BlackRock and JPMorgan are two firms that both made filings relating to money market products powered by blockchain. They have some common characteristics in terms of structure. These include features such as access to cash, repurchase agreements and short-dated U.S. government securities.
Each product is also being offered on Ethereum under the Investment Company Act of 1940 with limited access to ownership via permissioned blockchain systems.
What Is BlackRock Planning Around Tokenized Products?
BlackRock’s focus is on implementing blockchain records into an already established liquidity fund worth about $7 billion. The firm is launching a digital securities share class that is tied to its liquidity vehicle, which focuses on the Treasury.
BNY will act as a transfer agent and infrastructure will keep the official ownership ledger. However, identity data of the investors will be kept off the blockchain.
BlackRock and JPMorgan filings reflect the diverse approaches of key financial institutions as tokenized financial products come to the fore in digital asset markets. Institutions are now looking forward the potential of a public blockchain network. It will help them provide regulated financial instruments while remaining compliant and with limited access for investors.
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