Multinational banking firm JP Morgan has effectively performed its first mix-border transaction using decentralized finance (DeFi) on the public blockchain.
The trade was facilitated through the Financial Authority of Singapore’s (MAS) Project Protector on November. 2 — that was established included in an airplane pilot program to “explore potential decentralized finance (DeFi) applications in wholesale funding markets.”
Quite simply, the pilot was another walk into analyzing how traditional banking institutions may use tokenized assets and DeFi protocols to conduct financial transactions, among other use cases.
Singapore’s largest bank — DBS Bank, Tokyo, japan-based banking firm SBI Digital Asset Holdings and business leadership platform Oliver Wyman Forum also required part within the pilot program.
The trade was performed on Ethereum layer-2 network Polygon, utilizing a modified form of AAVE protocol’s smart contract code.
MAS stated that the “live mix-currency transaction” was conducted, involving tokenized Singaporean Dollar and Japanese Yen deposits, plus a simulated exercise of exchanging of tokenized government bonds.
Tyrone Lobban, Mind of Blockchain Launch and Onyx Digital Assets at JP Morgan’s Onyx business unit shared this news on Twitter on November. 2, noting the tokenized SGD deposits were the very first issuance of tokenized deposits with a bank.
WORLD! J.P. Morgan has performed its first *LIVE* trade on public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, a part of @MAS_sg Project Protector https://t.co/XI212SG4zg Many world 1sts here, & as this is public ⛓ here’s a transparenton what we should did:
— Ty Lobban (@TyLobban) November 2, 2022
MAS Chief FinTech Officer Sopnendu Mohanty stated it had been a “big step” towards more effective financial systems, and also the latest pilot helps get the country’s digital asset strategy, commenting:
“The live pilots brought by industry participants show using the appropriate guardrails in position, digital assets and decentralized finance have the possibility to change capital markets.”
Umar Farooq, the Chief executive officer of “Onyx by JP Morgan” — a company unit inside the asset management firm that concentrates on blockchain technology — told Bloomberg on November. 2 that JP Morgan’s on-chain transaction “was the very first time that the major bank, possibly any bank, had tokenized deposits on the public blockchain.”
DeFi lending protocol AAVE also commented around the new pilot, adding the DeFi trade is really a “huge milestone” for that industry because it “represents an enormous step towards bridging traditional financial assets into DeFi.”
Project Protector was initially formally launched in May. 2022, which came into being per month following a partnership is made between JP Morgan and DBS to construct a brand new blockchain interbank platform to enhance the job of central bank digital currencies (CBDCs).
Related: Security tokenization could be the newest use situation for blockchain tech
The milestone may come as most of the largest financial players have predicted big items to come for blockchain-based tokenization of real life assets.
Boston Talking to Group believed the entire size tokenized illiquid assets will achieve $16.1 trillion by 2030 inside a Sept. 2022 report.
While Cynthia Wu, COO of digital asset service platform Matrixport lately told Cointelegraph that “almost everything might be tokenized in five-10 years” which nonfungible tokens (NFTs) may be the instrument accustomed to represent off-chain assets like property deeds, equities and bonds.
