Tokenization is the process of converting real-world assets and financial assets into a digital form that’s recorded and traded on a decentralized ledger. The advantage is speed, including faster settlement of trades, quick movement of money while bypassing delays and frictions involved in traditional rails.
Banks have embraced tokenization, but mostly away from public networks. In the U.S., JPMorgan, Citi (C), Bank of America (BAC) and Wells Fargo (WFC), along with more than a dozen other banks, have plans to start a shared network for tokenized deposits.
JPMorgan’s private blockchain network, Kinexys, already handles more than $7 billion a day, a small piece in the bank’s $12 trillion a day payments business. Almost $50 billion worth of crypto assets are locked in Ethereum-based applications, according to DeFiLlama.
Abroad, JPMorgan is among more than 30 banks that are helping Swift, the interbank messaging service, define the features and governance of its blockchain-based ledger. In July, Swift said 17 banks, including Citi and Wells Fargo, were preparing to pilot live transactions on it. JPMorgan wasn’t on that list.
