Bittime – Fidelity International has decided to tokenize its money market funds (MMF) using JP Morgan 'Ethereum-based Onyx Digital Assets blockchain network
Read the complete explanation until the end of the article.
Mengenal Onyx Digital Assets
London-based Onyx Digital Assets is separate from US-based Fidelity Management and Research. This company uses a funds transfer agent and a Tokenized Collateral Network (TCN) to facilitate the tokenization process.
JP Morgan had previously used TCN to tokenize BlackRock money market fund shares, which were then transferred to Barclays as collateral.
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Tokenisasi MMF BlackRock
In October, BlackRock MMF shares were tokenized via TCN and transferred to Barclays for collateral purposes.
“Tokenizing shares of our money market funds for use as collateral is an important and natural step in adopting this technology more widely,” said Stephen Whyman, head of debt capital markets at Fidelity International.
“The benefits to our clients and the financial system as a whole are clear; especially in terms of increasing efficiency in meeting margin requirements and reducing transaction costs and operational risks.”
Total Real Asset Value Reaches Hundreds of Billions of Dollars
According to Markets Insider, the total value of real-world assets residing on the blockchain reached more than $118 billion last year. Boston Consulting Group projects a conservative estimate of $16 trillion by 2030 and an optimistic scenario of $68 trillion for the industry.
JP Morgan plans to expand its TCN tokenization initiative to cover equities, fixed income, and various other asset classes.
“Fidelity's participation in TCN brings their MMF unit to our network through tokenization, adding a new asset that was otherwise too complex to use in the current collateral landscape,” said Keerthi Moudgal, head of product at Onyx Digital Assets, JP Morgan.
Tokenized Stradivarius Violin
Last week, news broke that Galaxy Digital tokenized an 18th-century violin to use as collateral in a multi-million dollar loan.
A 1708 Stradivarius violin once owned by Russian empress Catherine the Great was purchased at auction by Animoca Brands co-founder Yat Siu and is worth more than $9 million.
Galaxy offers loans through Galaxy Global Markets, with an average loan book reaching $664 million in March, but these vintage loans demonstrate their efforts to expand their offerings to the crypto community.
RWA Becomes a Trend
Speaking to Blockhead, XDC Network co-founder Atul Khekade said, "With real-world assets (RWA) now trending, many projects are making it one of their main focuses. For the XDC ecosystem, RWA has been at our core, even before it became a word key."
For XDC, the benefits of tokenization are clear. "By tokenizing assets such as trade finance receivables, US Treasuries, and Gold, they become more accessible," said Khekade.
The Power of Blockchain is Decisive
Ultimately, it all comes down to the power of blockchain, which offers a robust network for transactions.
“An additional advantage of blockchain is that it is immutable and ensures that the underlying assets cannot be duplicated,” explains Khekade.
"In the case of trade finance, paper-based Bills of Lading means that a single document can be fraudulently presented multiple times for funding."
Also Read: Bitcoin ETF: BlackRock and Fidelity Still Lead the Market
MMF Tokenization is a Strategic Move
Fidelity International's move to tokenize its money market funds (MMF) is a strategic move in line with a global trend where real-world assets are increasingly being integrated into the blockchain ecosystem.
Fidelity hopes to utilize this technology to reduce operational costs and risks, as well as increase efficiency in financial transactions.
On the other hand, this move also reflects how large financial companies are starting to seriously explore the potential of blockchain for digital transformation.
Tokenization allows assets that are typically difficult to access or manage to become more liquid and tradable more easily on global markets.
JP Morgan TCN Network
BlackRock and Barclays, which are also involved in JP Morgan's TCN network, show how collaboration between large institutions can accelerate the adoption of this new technology.
By leveraging TCN, both companies can facilitate the use of MMF shares as collateral, providing greater flexibility in their asset management.
The benefits resulting from tokenization are not only limited to increasing efficiency and reducing costs. There is also huge potential to open up new opportunities in digital asset trading.
As more companies join tokenization initiatives, the market will see an increase in the liquidity and accessibility of these assets.
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Conclusion
Overall, the adoption of blockchain and tokenization by major companies such as Fidelity, BlackRock, and Barclays marks the beginning of a new era in asset management and financial transactions.
This technology will not only change the way we transact but also has the potential to create a more efficient, secure, and inclusive market for all industry players.
Industry observers believe that this is just the beginning, and over time, we will see more real-world assets transformed into digital tokens. This will open up endless opportunities and bring further innovation to the global financial sector.
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DISCLAIMER: This article is informational and is not an offer or solicitation to sell or buy any crypto assets. Trading crypto assets is a high-risk activity. Crypto asset prices are volatile, where prices can change significantly from time to time and Bittime is not responsible for fluctuations in crypto asset exchange rates.
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