BNP Paribas Joins JP Morgan Blockchain Trading Network

French bank BNP Paribas has become the first European bank to trade on JP Morgan’s Onyx Digital Assets platform, as banks look to blockchain technologies to modernise key markets.

The Onyx platform has carried out some $300 billion (£239bn) of deals in the repurchase, or repo market since its launch in December 2020.

The repo market, largely conducted in high-quality assets such as government securities, sees a dealer selling the security to investors and buying it back shortly afterward at a slightly higher price.

An estimated $1tn per day is conducted in the US repo markets.

Distributed ledger

The Onyx platform uses an Ethereum-based distributed ledger platform to enable traditional assets such as securities to be traded as tokens.

It uses a digitised version of the US dollar for products such as repo agreements and short-term intraday trading.

This allows for immedate US dollar settlements for digital repo transactions.

Currently the platform only allows for short-term borrowing against US Treasuries, enabling banks to translate liquid assets into collateral intraday.

The deal is governed by a smart contract that defines details such as the length of the loan and the settlement time.

But JP Morgan is also looking to expand it into areas as collateral mobility and digital debt insurance.

Expansion

Until now the platform has been focused on the US, with BNP Paribas the first European bank to take part.

JP Morgan also says it is looking at broadening the eligibility criteria for fixed-income assets beyond US Treasuries.

The bank said banks and their clients from Europe, the UK and Asia are planning to join the platform.

The bank has pushed aggressively into digital assets in recent years, in spite of criticisms of cryptocurrencies such as Bitcoin by chief executive Jamie Dimon.

After the creation of Onyx in 2020, it became the first leading US bank to offer all its clients access to cryptocurrency trading accounts last year.

In February it became the first bank to enter the metaverse, with the launch of a virtual lounge in blockchain-based Decentraland.