JPMorgan launches on-chain money market fund linked to Ethereum

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Global banking giant JPMorgan is setting up a new blockchain-based product, JLTXX, described in an SEC filing as an on-chain money market fund connected to the Ethereum blockchain.

Fund structure and what it will invest in

The fund is called the JPMorgan OnChain Liquidity-Token Money Market Fund. According to the filing, it will invest only in U.S. treasury bills, bonds, and notes. The product will be powered by JPMorgan’s Kinexys Digital Assets (KDA) unit.

How the blockchain connection works

The filing says the KDA technology will “create a permissioned system” that sits on top of public blockchains, specifically Ethereum. It adds that, while Ethereum is currently the only available blockchain for investors, expansion to other networks is anticipated in the future.

Key risks highlighted in the filing

In addition to interest rate changes and general market risks, the fund identifies “blockchain technology risk” as one of the main risks. The filing characterizes blockchain technology as “relatively new and untested.”

It also lists risks tied to the fund’s blockchain connection, including the blockchain not working as intended, regulatory concerns related to the technology, and undiscovered technical flaws.

Broader context in JPMorgan’s crypto push

The on-chain money market fund is part of JPMorgan’s ongoing activity in crypto. Last week, tokenization firm Ondo Finance said it worked with JPMorgan’s Kinexys platform, Ripple, and Mastercard to settle tokenized treasuries on the XRP Ledger.

Competition and market positioning

JPMorgan’s upcoming tokenized money market fund joins BENJI, a competing tokenized money market offering from Franklin Templeton. BENJI is described as being accessible on a broader range of blockchains, including BNB Chain, Canton, and Avalanche.