The move signals a major stride on the part of JPMorgan as it intensifies its efforts towards boosting the commercial applications of blockchain technology.
United States’ largest bank by assets, JPMorgan Chase & Comay have started using its blockchain-based collateral settlement for customers. This follows after a recent transaction between BlackRock Inc and Barclays Plc saw the duo use JPMorgan’s Tokenized Collateral Network (TCN) to effect the trade.
According to Tyrone Lobban, head of Onyx Digital Assets at JPMorgan, BlackRock had used TCN to turn some shares into digital tokens before transferring the same to Barclays as collateral in an over-the-counter (OTC) derivatives deal the duo had going on. Lobban shared this while speaking in an interviewwith Bloomberg.
Meanwhile, the move signals a major stride on the part of JP Morgan as it intensifies its efforts towards boosting the commercial applications of blockchain technology.
JPMorgan Redefining Blockchain Technology in Finance
For what it’s worth, it is rarely seen that a bank develops a blockchain app. However, JPMorgan may be setting the pace in that area. That is even though the volumes, for now, are still tiny in comparison to the bank’s overall business.
For context, Wall Street firms have spent nearly a decade looking for ways to simplify some of their more complex processes using blockchain technology. However, the limited number of applications being used commercially makes one wonder whether the technology has any real-life applications in finance.
Now though, it appears that previous barriers in terms of complexity may be broken. According to JPMorgan’s Lobban, using the bank’s blockchain network Onyx Digital Assets, the collateral moved almost instantaneously. Thus, creating a better experience than before that one had to wait for an entire day.
With the app, JPMorgan hopes to eventually allow clients to use other assets as collateral. As Ed Bond, head of trading services at JPMorgan says, clients will eventually be able to use equities and even fixed income as collateral. To this end, Bond noted in an interview:
“Institutions on the network can use a wider scope of assets to meet any collateral requirements they have on the back of trading.”
Other Banks Are Keen on Floating Blockchain Projects
Meanwhile, just as JPMorgan is pushing, many of its biggest rivals also appear to be highly invested in blockchain and digital-asset projects.
Goldman Sachs Group Inc, for instance, unveiled its digital-asset platform last November. Whereas, asset managers, including Franklin Templeton, have also shown keen interest in using blockchain technology to process transactions for their funds.
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Author Mayowa Adebajo
Mayowa is a crypto enthusiast/writer whose conversational character is quite evident in his style of writing. He strongly believes in the potential of digital assets and takes every opportunity to reiterate this. He's a reader, a researcher, an astute speaker, and also a budding entrepreneur. Away from crypto however, Mayowa's fancied distractions include soccer or discussing world politics.
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The proposal outlines a deal that encompasses roughly 9% of iFinex’s outstanding capital and assigns a value of $1.7 billion to the company.
As per the latest report, the parent firm of the Bitfinex exchange – iFinex Inc – has started exploring a $150 million share buyback, as per the letter written to shareholders on September 22. The directors of iFinex have proposed an offer of $10 per share for 15 million shares.
The document notes that a group of directors within iFinex and its subsidiaries are eligible to participate in the buyback. Among them, is Giancarlo Devasini, who previously worked as a plastic surgeon and currently serves as the Chief Financial Officer for both Tetherand Bitfinex.
It is worth noting that there is no specified minimum threshold for the number of shares to be offered for sale to trigger the buyback. iFinex is prepared to purchase as many shares as are made available until the maximum limit is reached. The company determined its valuation internally, using a variety of business metrics, without seeking validation from an independent third party. Shareholders need to express their intent to sell their holdings to iFinex by October 24.
Details of the Bitfinex Share Buyback
The proposal outlines a deal that encompasses roughly 9% of iFinex’s outstanding capital and assigns a value of $1.7 billion to the company. This agreement is contingent on the business securing an infusion of funds from at least one of its subsidiaries.
The offer is extended to shareholders who acquired iFinex stock through a 2016 swap arrangement with the investment platform BnkToTheFuture. In that year, Bitfinex experienced a hack resulting in the theft of approximately $71 million worth of Bitcoin, a sum now valued at approximately $3.3 billion. To compensate affected users, Bitfinex issued BFX tokens, which iFinex redeemed later in exchange for company shares through BnkToTheFuture.
The decision to initiate the buyback is due to the “positive performance” exhibited by the company in recent years, as stated by iFinex in a communication to Bloomberg News. Tether emphasized its separate identity from iFinex, albeit sharing common shareholders. Simon Dixon, the CEO of BnkToTheFuture, declined to comment on confidential client information.
By selling their shares back to iFinex, investors can alleviate the increasing demands placed on them to provide information in support of Bitfinex Group’s regulatory applications and to address heightened scrutiny. Additionally, this move allows them to exit a relatively illiquid investment.
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Author Bhushan Akolkar
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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