According to Tyrone Lobban, head of Onyx Digital Assets with the bank, the plan to tokenize U.S. Treasurys or money market fund shares “means these could all potentially be used as collateral in DeFi pools.”
“The overall goal is to bring these trillions of dollars of assets into DeFi, so that we can use these new mechanisms for trading, borrowing [and] lending, but with the scale of institutional assets,” he said.
The report notes that institutional DeFi often comes with know-your-customer (KYC) strictures on the lending pools for crypto. JPMorgan plans to incorporate tokenizing traditional assets on a much larger scale. Onyx see two complimentary parts. First is JPMorgan’s blockchain collateral settlement system, extended recently to include tokenized versions of BlackRock’s money market fund shares.
And the second is a pilot from the Monetary Authority of Singapore, “Project Guardian,” which includes JPMorgan and other institutions and which tests institutional-friendly DeFi with permissioned liquidity pools of tokenized bonds and deposits.
He said he wants to put an identity layer to enable KYC-based access, allowing protocols to support institutions “naturally” without having to make too many changes to how they work.
He’d previously only called the conditions “a storm,” and said people needed to brace themselves. JPMorgan, he said, would be looking at being conservative with its balance sheet.
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