Goldman Sachs Group has joined JPMorgan’s private blockchain network, for a repurchase agreement that uses smart contracts and digitized versions of the U.S. dollar.
According to the Bloomberg report, on 17 June the first starting trade was conducted, when it swapped tokenized version of the U.S. Treasury bond for JPMCoin.
“We see this as a pivotal moment for the digitization of transaction activity,” said Mathew McDermott, global head of digital asset for Goldman’s international market division. The transaction took 3 hours and five minutes to complete.
“We pay interest per the minute,” said MCGoldman’s “We firmly think this will change the nature of the intraday marketplace.”
JPMorgan created the new repo market using its version of the Ethereum blockchain first trade in December. The bank established its version of the Ethereum blockchain, Onyx, which is now processing more than $1 billion worth of transactions daily.
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A repurchase agreement is a type of loan where a financial institution sells collateralized securities in the contract. It can buy back at dilate price at some other date, usually overnight.
Given the ability of repo transactions to exchange collateral and cash simultaneously and instantly, McDermott said blockchain would bring massive advantages to the repo market, which is worth over $4.6 trillion.
