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JPMorgan Harnesses Blockchain Technology to Achieve Cost Savings in Financial Instruments

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JPMorgan Saves Clients $20 Million with Blockchain Tech

JPMorgan, a major financial institution, has saved its clients $20 million by using blockchain technology. While this amount may seem small compared to the trillions of dollars JPMorgan deals with on a daily basis, it is still a significant achievement.

The Role of Blockchain in Financial Services

One of the financial services provided by JPMorgan is a “repo,” or repurchase agreement. Traditionally, repos cannot settle on the same day, but with blockchain technology, this limitation no longer exists. Blockchain allows for the tokenization of traditional assets, such as US Treasurys and cash in the form of JPMorgan coin. These assets can then be instantiated as smart contracts, enabling precise timing for trades and fund returns.

Cost Reduction and Efficiency

By using blockchain technology, JPMorgan is able to reduce costs and increase efficiency for its clients. The precise timing of trades and fund returns eliminates the need to lock up capital overnight, allowing for more efficient use of funding. This becomes especially impactful in times of tightening rates or liquidity stress.

Expanding Utilities and Growing Demand

Aside from cost savings, blockchain technology also adds new utilities to financial services. For example, asset management giant BlackRock is looking to tokenize money market fund shares, providing utility to investors who can now pledge those shares as collateral without redeeming out of the fund. The use of blockchain technology in financial services is growing rapidly, with JPMorgan processing as much in the first half of 2023 as it did throughout the whole of 2022.

Future Growth and Client Demand

JPMorgan expects the trajectory of blockchain-based financial services to double in the coming year. Despite the small numbers in comparison to the overall financial market, the demand from global clients is a strong signal of the value and utility provided by blockchain technology. Clients are not concerned about the underlying technology; they simply want access to the new features and benefits it offers.

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