French Banking Giant BNP Paribas Joins JPMorgan’s Onyx Blockchain

JPMorgan’s blockchain started with repo markets but has begun exploring institutional access to decentralized finance markets

article-image

Source: Shutterstock

share

key takeaways

  • JPMorgan’s permissioned blockchain Onyx tokenizes US Treasurys for fast settlement within intraday repo markets
  • BNP Paribas is the latest bank to join the network after rival Goldman Sachs began utilizing it last June

French banking giant BNP Paribas, the second-largest banking group in Europe, is now trading digital tokens on JPMorgan’s blockchain network for short-term asset loans.

JPMorgan’s blockchain system, Onyx Digital Assets, launched in December 2020 and has so far processed more than $300 billion in government bond transactions, according to a report from the Financial Times.

For now, Onyx deals specifically with the intraday repurchase (repo) market, which is valued at around $12 trillion. Banks can lend tokenized US Treasurys for a few days at a time without the assets leaving their balance sheets. This helps navigate liquidity demands imposed on institutions in the wake of the 2008 financial crisis.

Borrowers can then exchange the tokens for liquid cash, boosting their available collateral for use within derivatives markets. Onyx is integrated with JPMorgan’s own digital payments token, JPM Coin, which debuted around the same time as its blockchain platform.

Deals on the permissioned blockchain network are settled by automated smart contracts. Onyx’s website boasts that the service enables “near instantaneous atomic exchange of collateral for cash.” Repo transactions can be “traded, settled, and matured within a day,” and trade terms can be as little as minutes.

BNP Paribas’ head of engineering Joe Bonnaud told the Financial Times the bank’s adoption of Onyx was more than exploration of a proof of concept. The bank, which managed $612 billion in assets at the start of the year, hopes the move will help utilize blockchain as trading and operations life cycles of markets evolve. Rival bank Goldman Sachs joined Onyx last June.

Permissioned (private) blockchains such as Onyx differ greatly from Bitcoin and Ethereum, which are permissionless (public) networks. Anyone with the right equipment can join and use permissionless blockchains — either as validators or regular users — while JPMorgan alone controls who validates Onyx transactions and ultimately decides which institutions can access its network.

BNP Paribas is among a consortium of French banks experimenting with a permissioned blockchain project of the French central bank, trading debt securities as part of research on central bank digital currencies (CBDCs).

JPMorgan is deep in blockchain, slowly wading into crypto

JPMorgan adopting blockchain — even a watered-down version of it — might be surprising to some, considering CEO Jamie Dimon’s repeated criticisms of bitcoin over the years.

Dimon has been one of the most vocal proponents of the “blockchain, not bitcoin” mantra, which became synonymous with crypto-weary institutional players in 2018 — labeling BTC “fool’s gold” and “worthless” as recently as October.

JPMorgan developed and sold open source enterprise blockchain platform Quorum to Ethereum giant ConsenSys in August 2020 for an undisclosed amount. Quorum enables companies and other entities to deploy their own blockchain networks validated by a single entity, hosted by Microsoft’s Azure cloud service. JPMorgan joined a $65 million ConsenSys funding round one year later.

Despite Dimon’s skepticism, JPMorgan quietly began offering its richest clients access to a half-dozen crypto funds last year, including a bitcoin fund operated by New York-headquartered finance unit NYDIG, four Grayscale Investment crypto funds, and one managed by Osprey.

JPMorgan also made a “strategic investment” in the San Francisco-based blockchain analytics firm TRM Labs in February. The company helps trace illicit crypto flows to aid in regulatory matters, similarly to Chainalysis and Elliptic.

The bank even established a “lounge” (also named Onyx) in the blockchain-powered metaverse app Decentraland in the same month, the first major institution to do so.

As for what’s next, head of Onyx Digital Assets Tyrone Lobban told reporters JPMorgan was exploring institutional access to decentralized finance markets via Onyx, although details were not forthcoming.


Don’t miss the next big story – join our free daily newsletter.

Tags

Upcoming Events

Hilton Metropole | 225 Edgware Rd, London

Mon - Wed, March 18 - 20, 2024

Crypto’s premier institutional conference returns to London in March 2024. The DAS: London Experience: Attend expert-led panel discussions and fireside chats Hear the latest developments regarding the crypto and digital asset regulatory environment directly from policymakers and experts.

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research report - cover graphics (1).jpg

Research

In this report, we dive into crypto private market data to gather insights on where the future of the industry is headed. Despite a notable downturn in private raises, capital continues to infuse promising projects that aim to transform payments, banking, consumer experiences, community, and more, with 2023 being the fourth-largest year for crypto venture capital.

article-image

BUZZ holds shares of Coinbase, Robinhood and MicroStrategy

article-image

Opinion: Even though I didn’t pay for my “Diamond Hands” burger with BTC, don’t let that fool you into thinking that crypto’s development is futile

article-image

The results mark “a major positive inflection point,” one analyst says, as the exchange carries net income momentum into a crypto rally

article-image

While the slate of 10 US spot bitcoin funds have tallied $4.6 billion of net inflows thus far, half of the field is lagging the leaders

article-image

Trading volumes totalled $154 billion in Q4, including $125 billion in institutional volume

article-image

DeFi on Bitcoin is all the rage right now and Stacks is positioned to benefit