The $13 trillion repurchase market is being quietly transformed by blockchain.

Written by: Anna Irrera, Bloomberg

Compiled by: Chopper, Foresight News

JPMorgan Chase has invested hundreds of millions of dollars over more than a decade developing blockchain systems—an innovation once thought to completely disrupt financial markets—that has yet to spark an industry-wide transformation. But now, in a key area, banks and blockchain technology have finally achieved a substantive breakthrough: the repurchase agreement market.

The repurchase market, with a scale of nearly $13 trillion, may not be Wall Street’s most glamorous arena, but it is a major financial artery that keeps global capital flowing. In simple terms, a repurchase agreement is an arrangement in which institutions borrow cash secured by government bonds—most often in overnight transactions. It provides the underlying short-term funding support for trading, settlement, and market-making activities across the entire financial system.

JPMorgan Chase and other Wall Street peers have found that the blockchain technology underpinning cryptocurrencies is highly compatible with repurchase business. It enables precise, customizable trading, allowing funds and collateral to move faster and be scheduled and dispatched more flexibly—helping traders put idle capital to work, improve capital efficiency, and hedge market risks.

Eddie Wen, Head of Global Digital Markets at JPMorgan Chase, said: “It completely makes sense to use blockchain solutions in repurchase business.” As one of the largest banks in the repurchase trading space, Wen added that customers use the product every day.

Six years ago, JPMorgan Chase officially launched a blockchain-based financing product. To date, the platform has processed approximately $3 trillion in repurchase transactions. Currently, it handles daily repurchase financing volumes for clients totaling hundreds of millions of dollars, while JPMorgan Chase’s internal cross-department average daily trading volume is around $5 billion.

For this giant, whose daily trading volume in the traditional repurchase market reaches hundreds of billions of dollars, even if this amount still represents a small share, it marks a critical step toward industry leaders formally embracing blockchain technology.

The whole industry crowds into tokenized repurchase

In addition to JPMorgan Chase, institutions including HSBC, market makers DRW Holdings, and Virtu Financial, as well as financial infrastructure service provider Broadridge and trading platform Tradeweb, are collectively increasing their investment in the tokenized repurchase track. Currently, the daily trading volume of tokenized repurchase on major blockchain platforms has reached hundreds of millions of dollars. Although each institution’s level of participation and trading frequency differ, entering the market has become a shared industry consensus.

Objectively speaking, the market will not fully transform overnight, and the scale of blockchain repurchase trading still has a large gap compared with traditional markets. To achieve large-scale adoption, more banks, traders, and financial infrastructure service providers need to adopt compatible systems. At the same time, the industry faces new regulatory rules, such as mandatory central clearing for repurchases; in the short term, most institutions still need to prioritize adapting existing business processes.

But even at this early stage, the growth momentum of the track has already taken shape. Most other blockchain applications in capital markets remain at the pilot or concept-testing stage, whereas the scale at which institutions have deployed blockchain in the repurchase market already far exceeds that of the vast majority of mainstream financial scenarios. Tokenized repurchase has therefore become one of the most solid—and potentially most far-reaching—blockchain use cases in traditional finance.

Elisabeth Kirby, Head of Market Structure at Tradeweb, which launched its blockchain repurchase platform toward the end of last year, said bluntly: “This is not a proof-of-concept, and it’s not a pilot project set aside for observation. It is a real growth sector.”

Why the explosion now?

Over the past year, tokenized repurchase trading has noticeably accelerated, driven by multiple favorable factors. Blockchain networks have moved from testing to real business deployment. Regulators’ acceptance of migrating repurchase business to chains has improved significantly. Given the important role of the Federal Reserve and other institutions during market turbulence, a more relaxed regulatory stance is crucial. A more friendly digital asset policy environment during the Trump administration has also encouraged Wall Street institutions to expand their deployments.

Meanwhile, more and more customers are directly experiencing the advantages of blockchain. The industry’s understanding has been completely turned on its head: blockchain is no longer just a niche tool for the crypto community, but a general financial infrastructure that can optimize trading processes and reduce operating costs.

Yuval Rooz, CEO of digital asset firm Digital Asset Holdings, said: “The biggest change is that the industry is no longer stuck on whether the technology works—it’s focused on how fast it can be rolled out at scale.” The company, backed by major investors including JPMorgan Chase, Goldman Sachs, DRW, Castle Securities, and Virtu, has built the Canton network, which is now one of the most mainstream blockchain backbones in traditional finance.

In February this year, the Canton network completed multiple cross-border repurchase transactions using tokenized UK government bonds as collateral. Its technology also supports Broadridge’s distributed ledger repurchase platform, serving institutions such as UBS, HSBC, and Société Générale.

Recently, Bloomberg’s parent company, Bloomberg L.P., also partnered with data service provider Kaiko to integrate Bloomberg data into the Canton network, serving tokenized U.S. Treasury notes and on-chain repurchase transactions.

Operational logic: traditional repurchase vs. tokenized repurchase

Different platform models have slight differences, but the core distinction lies in how funds and securities are transferred.

In traditional repurchase markets, there are fixed opening, order placement, and market-closure times, with trading paused overnight and on weekends. The business highly depends on intermediaries to handle collateral and settlement, involving many steps and high fees; ad hoc changes often can only be coordinated via phone communication. Cross-border transactions are especially complicated due to time zone and holiday mismatches, and idle funds can be tied up for hours. Trading can also be interrupted or canceled due to missed deadlines, insufficient collateral, or system failures.

Composition of collateral in global repurchase transactions

Tokenized repurchase solves the problems above in a near-perfect way. Borrowers initiate financing requests through digital interfaces. After the funding provider confirms, both cash and securities collateral are mapped to on-chain tokens. Once both parties confirm, the transaction is booked on-chain; transaction terms are automatically executed as agreed and can be audited and traced end to end. The most core advantage is that it enables trading 24/7, unaffected by traditional business hours.

Sonali Das Theisen, Head of Fixed Income, FX and Commodities Electronic Trading and Market Strategy at Bank of America, commented: “Blockchain can effectively reduce friction in capital flows, and it’s an inevitable trend for the industry to move in this direction.”

Real financial benefits

For the giants in the repurchase market, the deployment of blockchain brings tangible financial gains. Banks such as JPMorgan Chase can not only save on fees and transaction time, but also reduce capital charges for trading under stringent regulatory requirements.

Broadridge’s latest analysis shows that if large banks migrate 15% of their repurchase business onto blockchain, their daily liquidity buffer funds could decrease by 8%–17%. The specific savings depend on an institution’s size, operating regions, asset structure, and risk appetite, but overall it can substantially activate idle capital.

A Broadridge research report cites data from an unnamed large European bank. The bank typically needs to set aside about €1.1 billion (about $1.3 billion) each day to meet intraday liquidity needs. If the buffer is reduced by 15%, it could free up approximately €175 million for other business activities—or reduce reliance on external financing.

Horacio Barakat, Broadridge’s Global Head of Digital Innovation, said: “The magnitude of capital savings is very significant. Even a small optimization can save tens of millions of dollars in costs every year.” The company’s platform handled an average of $368 billion in daily repurchase transactions in April, with monthly scale approaching $8 trillion. Compared with last year, daily trading volume increased by 268%.

The industry ecosystem is also beginning to move toward standardization. DTCC, Wall Street’s core clearing institution, recently announced plans to tokenize high-liquidity assets it holds in custody, including U.S. Treasuries, Russell 1000 component stocks, and ETFs. This move will greatly expand the pool of eligible collateral for tokenized repurchase. Institutions will be able to directly reuse their existing custody assets to connect to blockchain ledgers, significantly lowering the entry barrier.

Supporting 24/7 trading of traditional assets

Industry insiders say that tokenized repurchase and similar new financing models are an important support for traditional assets to move toward 24/7 trading. Nasdaq has published a plan for around-the-clock trading, and the New York Stock Exchange is developing a tokenized continuous trading platform.

DRW founder Don Wilson noted: “If the future market is to move toward 24/7 trading, we must enable cash to be borrowed at any time. On-chain repurchase is precisely the core infrastructure supporting this transformation.” As an early investor in Digital Asset, DRW has completed multiple tokenized transactions on the Canton network over the past year.

DRW founder Don Wilson

Any new technology faces the same challenges, and large-scale blockchain adoption in repurchase trading is no exception. Although Canton has already become mainstream, the industry still has multiple independent on-chain systems that are not connected with each other. Institutions need to adapt to several platforms and invest heavily in people and operations and maintenance, resulting in fragmented and split trading volumes. Second, blockchain systems have not yet gone through a full market cycle or extreme stress tests. Since 2008, the traditional repurchase market has endured multiple risk shocks, but on-chain systems have not yet been tested in real scenarios such as sudden failures late at night or extreme market volatility.

In addition, traditional traders have long grown accustomed to existing—though inefficient—processes, with rules, tolerance mechanisms, and post-event emergency plans all already established. On-chain trading follows code-based rules, leaving no room for flexible adjustments.

A spokesperson from asset management giant Franklin Templeton’s innovation team, Sandy Kaul, said candidly: “Traditional business still leaves many elastic buffers; there’s absolutely no room for fault tolerance on-chain. Everything is written into the code, so you can’t negotiate on the fly about how many extra minutes to allow.”

Even so, many in the industry generally believe these are merely implementation issues to be solved, not reasons to go backward. “We are at a critical turning point. When blockchain enters the traditional financial repurchase market, the curtain is officially rising.”