- Goldman Sachs used the JPMorgan blockchain for a repo trade.
- The JPMorgan repo market has facilitated over $1 billion in trades to date.
- Also, JPMorgan is not the only Wall Street bank delving into blockchain.
Financial giant Goldman Sachs recently made its first blockchain-based repo trade. Of note, the bank used rival bank JPMorgan’s blockchain to facilitate the transaction.
Specifically, repurchase agreements (repo) are a form of short-term borrowing using government securities. The dealer sells the government security, in this case, bonds, overnight. Only to buy the security back the next day at a slightly higher price.
JPMorgan’s blockchain uses contracts and its stablecoin JPMCoin as a digital and faster means to execute repo trades. As such, Goldman swapped a tokenized version of a US treasury bond using the JPMCoin. Notably, the stablecoin is pegged 1:1 with the US dollar.
According to a Bloomberg report, Goldman did not disclose how much the trade was worth, but the transaction took 3 hours 5 minutes to complete. In fact, knowing the exact time the transaction took is a huge achievement in itself. Mathew McDermott, global head of digital assets for Goldman’s global markets division noted,
“We see this as a pivotal moment for the digitization of transactional activity…We pay interest per the minute, we firmly think this will change the nature of the intraday marketplace.”
This is because the current market is not able to exactly quantify the time it takes to complete repo transactions. As such, knowing the exact time a transaction took is a huge step forward.
The JPMorgan repo market is based on the firm’s Ethereum like blockchain. JPMorgan also uses Bank of New Mellon Corp as its custodian for repo trades. Additionally, the market began operation in December and has since facilitated over $1 billion in sales. Of note, the global repo market is currently worth about $2.4 trillion.
Finally, JPMorgan is not the only Wall Street bank delving into the blockchain. Fellow early adopter Paxos Trust has been using blockchain to settle equity trades in almost real-time. Meanwhile, Arca is streamlining finance through the use of digital shares in a US treasury fund