David Canellis

<div id="highlights-block_628b9282eb317" class="highlights">
 <ul>
 <li>JPMorgan’s permissioned blockchain Onyx tokenizes US Treasurys for fast settlement within intraday repo markets</li>
 <li>BNP Paribas is the latest bank to join the network after rival Goldman Sachs began utilizing it last June</li>
 </ul>
 
</div>



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 <a href="https://www.ft.com/content/f23c990a-913d-4613-8014-f61d35b6e09d" target="_blank" rel="noreferrer noopener">report</a> 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 <a href="https://www.jpmorgan.com/onyx/onyx-digital-assets.htm" target="_blank" rel="noreferrer noopener">website</a> 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 <a href="https://cms.blockworks.co/french-central-bank-trades-oats-on-private-blockchain/" target="_blank" rel="noreferrer noopener">permissioned blockchain project</a> of the French central bank, trading debt securities as part of research on central bank digital currencies (CBDCs).



<h3 class="wp-block-heading">JPMorgan is deep in blockchain, slowly wading into crypto</h3>



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 &#8220;<a href="https://cms.blockworks.co/jpmorgan-enters-the-metaverse-with-virtual-decentraland-lounge/" target="_blank" rel="noreferrer noopener">lounge</a>&#8221; (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.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

French Banking Giant BNP Paribas Joins JPMorgan’s Onyx Blockchain

Jacquelyn Melinek

<div id="highlights-block_621d0bb093c84" class="highlights">
 <ul>
 <li>This investment highlights the significance financial institutions investing in crypto technology to mitigate associated risks, Esteban Castaño, co-founder and CEO of TRM, said to Blockworks</li>
 <li>TRM’s vision aligns with JPMorgan’s ambitions to build compliant and secure blockchain products, Umar Farooq, CEO of Onyx by JPMorgan, said in a statement</li>
 </ul>
 
</div>



Blockchain intelligence company TRM Labs has added JPMorgan Chase &amp; Co. to its list of investors after the bank announced its strategic investment on Monday.



The total amount invested by JPMorgan was not disclosed, and neither organization was available for immediate comment.



TRM provides blockchain intelligence to help traditional financial institutions as well as crypto-focused businesses and public agencies analyze and manage crypto-related fraud and crime.



“I think it shows that financial institutions are not investing in just crypto and potential use cases but the technology to mitigate any associated risks,” Esteban Castaño, co-founder and CEO of <a href="https://www.trmlabs.com" target="_blank" rel="noreferrer noopener">TRM</a>, said to Blockworks. “It reflects the long term mindedness of the industry and figuring out what’s the right answer for crypto in terms of risk management, trust and safety.”



The company was founded in 2017 and recently closed its <a href="https://cms.blockworks.co/trm-labs-lands-60-million-series-b-round/" target="_blank" rel="noreferrer noopener">$60 million Series B</a> in December 2021. The round at the time was led by Tiger Global and included other major investors and financial players including American Express’ Amex Ventures, Citi Ventures, PayPal Ventures, Visal, Block <a href="https://cms.blockworks.co/jack-dorseys-square-to-change-its-name-to-block/" target="_blank" rel="noreferrer noopener">(formerly Square Inc.</a>) and Jump Capital.



“People often cite that financial institutions are ‘here’ and I think that’s more true now than ever before,” Castaño said. “Today we see countless financial institutions that have tangible projects in flight for crypto related projects and services and they’re making investments in risk management infrastructure so those products can be successful, trusted and safe for consumers.”



JPMorgan has spent the last six years exploring the possibilities and applicability of blockchain technology, Umar Farooq, CEO of Onyx by JPMorgan, said in a statement. TRM’s vision aligns with JPMorgan’s ambitions to build compliant and secure blockchain products, Farooq added.



Earlier this month, JPMorgan took a jump into the metaverse after launching a virtual lounge in the popular blockchain-based metaverse Decentraland. The “Onyx lounge” was unveiled with a report from the bank outlining metaverse-related growth opportunities, Blockworks previously <a href="https://cms.blockworks.co/jpmorgan-enters-the-metaverse-with-virtual-decentraland-lounge/" target="_blank" rel="noreferrer noopener">reported</a>.



Separately, two JPMorgan research analysts Kenneth Worthington and Reginald Smith said in a report they see 2022 potentially as “the year of the blockchain bridge…or the year of financial tokenization.” The analysts also said they expect the evolution of crypto markets to accelerate this year, particularly for financial services, Blockworks <a href="https://cms.blockworks.co/jpmorgan-2022-could-be-year-of-the-blockchain-bridge/" target="_blank" rel="noreferrer noopener">reported</a> in January.



“Trust and safety is a prerequisite for crypto to be successful in the long run,” Castaño said. “Blockchain intelligence builds greater trust and safety and enables crypto to become the next dominant financial system of the world.”



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

JPMorgan Chase Strategically Invests in Blockchain-focused TRM Labs

Morgan Chittum

<div id="highlights-block_620bfabd3a809" class="highlights">
 <ul>
 <li>Analysts from the bank predict in-game ad spending will reach $18.4 billion by 2027</li>
 <li>The average price of virtual land doubled from $6,000 to $12,000 in six months last year, according to JPMorgan</li>
 </ul>
 
</div>



JPMorgan took a big step into the metaverse Tuesday, jumping into the nascent space with a virtual lounge in popular blockchain-based world Decentraland.



The “Onyx lounge” was unveiled along with a <a href="https://www.jpmorgan.com/content/dam/jpm/treasury-services/documents/opportunities-in-the-metaverse.pdf" target="_blank" rel="noreferrer noopener">report</a> from the bank outlining metaverse-related growth opportunities for businesses and causes for its “explosive interest.”



“When you think about the economics of the metaverse — or metanomics — there are opportunities in almost every market area.&#8221; the bank wrote. “We are not here to suggest the metaverse, as we know it today, will take over all human interactions, but rather, to explore the many exciting opportunities it presents for consumers and brands alike.”



The metaverse, JPMorgan said, has a market opportunity of $1 trillion in yearly revenue, as creators tap Web3 to monetize their work in new ways.



“This democratic ownership economy coupled with the possibility of interoperability, could unlock immense economic opportunities, whereby digital goods and services are no longer captive to a singular gaming platform or brand,” according to the report.



The bank cited household names such as PWC, Walmart, Nike, Verizon, Gap, Adidas, Hulu and Atari as early adopters and investors in the blockchain economy.



“Business leaders and boardrooms around the world are now asking themselves, ‘What is my metaverse strategy? What am I supposed to be doing in the metaverse? What is the metaverse anyway?’” the note said.



The average price of virtual land has doubled from $6,000 to $12,000 in six months last year, according to data from four popular metaverse platforms. The bank predicts in-game advertising spending will reach $18.4 billion by 2027.



Although the metaverse has evolved “very quickly,” and it is “difficult to base a business strategy on such a dynamic space,” JPMorgan said that the risk of “being left behind is worth the incremental investment needed to get started.”



JPMorgan’s metaverse move follows Morgan Stanley’s related <a href="https://cms.blockworks.co/morgan-stanley-sees-8-trillion-metaverse-market-eventually/" target="_blank" rel="noreferrer noopener">note</a> to clients last month. 



Analysts at the bank predict the metaverse’s initial total addressable market (TAM) in China will be roughly $4 trillion, as it replaces the mobile internet with a more “immersive experience.” Once the metaverse begins “disrupting offline activity,” such as real-estate showings, vehicle test-drives and education, that figure is projected to soar to $8 trillion.



“We expect the metaverse TAM to be expansive and go beyond the current online consumption market, which is mainly dominated by e-commerce and online entertainment spending,” the note said.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.

Onyx Lounge