The U.K. firm has partnered with JPMorgan’s Tokenized Collateral Network (TCN) to pilot the tokenization of its money market fund using Onyx Digital Assets.
Fidelity International, a funds management firm based in London, has tokenized shares in a money market fund (MMF) using JPMorgan’s Ethereum-based private blockchain network, Onyx Digital Assets. The tokenization process was almost instantaneous due to the seamless connectivity between the fund’s transfer agent (JPMorgan’s transfer agency business) and the Tokenized Collateral Network, which acts as an intermediary between a collateral receiver and a collateral provider on JPMorgan’s Onyx blockchain. Fidelity International operates separately from U.S.-based Fidelity Management and Research.
Tokenizing traditional financial assets has become a key focus for banks, and JPMorgan has been developing this area for several years. Tokenization involves creating a virtual investment vehicle on a blockchain that represents real-world assets such as real estate, precious metals, and collectibles. This method can also be applied to stocks and bonds.
Fidelity International has a long history with digital assets, having recently collaborated on a tokenization project with Swiss bank Sygnum in March.
In October of last year, JPMorgan conducted its first live blockchain-based collateral settlement transaction involving tokenized shares of a BlackRock money-market fund. These shares were transferred to Barclays as collateral in an over-the-counter derivatives trade. BlackRock has continued to advance tokenization efforts through its public-facing BUIDL project, partnering with tokenization services firm Securitize.
“Tokenizing our money market fund shares for use as collateral is a significant and logical first step in expanding our adoption of this technology,” said Stephen Whyman, Fidelity International’s head of debt capital markets, in an email interview. “The benefits for our clients and the broader financial system are evident, particularly in terms of increased efficiency in meeting margin requirements and reducing transaction costs and operational risk.”
JPMorgan’s Tokenized Collateral Network (TCN) began with the tokenization of money market shares, a type of mutual fund that invests in high-quality, short-term debt instruments and cash equivalents. The bank plans to extend tokenization across equities, fixed income, and various other asset classes.
Fidelity’s involvement in TCN integrates its MMF units into our network through tokenization, introducing an asset that is otherwise too complex to utilize in today’s collateral landscape,” said Keerthi Moudgal, head of product at Onyx Digital Assets, JP Morgan, via email.
