Goldman Sachs Group Inc. has joined the blockchain-based network created by JPMorgan Chase & Co. for repurchase agreements that use smart contracts and a digitized version of the U.S. doll
Goldman Sachs On JPMorgan’s Blockchain
In an interview with Bloomberg, Mathew McDermott, global head of digital assets for Goldman Sachs’ global markets group, verified the first transaction, which took place on June 17.
Goldman Sachs exchanged a tokenized version of a US Treasury bond for JPM Coin, JPMorgan’s dollar-pegged stablecoin, in the deal. Last year, JPMorgan launched its own blockchain solution to improve the efficiency of repo transactions. JPM Coin is used on the platform to swap digital US Treasury bonds.
“We see this as a pivotal moment for the digitization of transactional activity,” McDermott said Tuesday in an interview. Unlike in the traditional repo market, the exact amount of time the banks took to complete the transaction was quantifiable. In this case, it was 3 hours and 5 minutes.
JPMorgan launched the new repo market in December, utilizing its own version of the Ethereum blockchain. Through its Onyx blockchain platform, it now trades more than $1 billion every day. According to spokesperson Jessica Francisco, the firm is in talks with more than ten banking and financial clients about joining the repo network. The trades were held in custody by Bank of New York Mellon Corp.
The trade, McDermott said, was a watershed moment for the digitization of transactions because, unlike the old repo market, the precise date of the transaction could be captured thanks to blockchain technology.
According to McDermott, smart contracts on the blockchain enable collateral and cash to exchange simultaneously and instantly, which is a significant step forward for the repo market:
“We pay interest per the minute. We firmly think this will change the nature of the intraday marketplace.”
Related article | Goldman Sachs to Begin Offering Bitcoin Derivatives to Investors
Goldman Sachs Has Been Making Strides In Crypto
Goldman Sachs recently announced that it plans to start trading Ethereum options and futures.
Back in May, a report by Coindesk revealed that the company had started to offer its investors access to non-deliverable forwards (NDFs). NDFs is basically an exchange derivatives whereby two parties agree to exchange a currency at a fixed rate on a future date. Goldman had been offering its investors NDFs for bitcoin.
Goldman Sachs, in March, filed an application with the US Securities and Exchange Commission (SEC) to create a product that would enable investors be indirectly exposed to bitcoin. This eliminates the need to buying bitcoin, but being able to also invest in the asset.
On June 18, Goldman Sachs began trading Bitcoin futures through Mike Novogratz’s Galaxy Digital network, paving the way for banking institutions. According to multiple sources, Goldman Sachs is the first bank in the United States to actively trade cryptocurrencies.
Related Reading | How Cryptocurrency Wallets Could Replace Banks
Featured image from Getty Images, chart from TradingView.com