Loans

A loan is money lent and repaid with interest. Today, the records for a loan are spread across the lender, the servicer (the company that collects the payments) and the investors who buy loans. Selling loans, or bundling many of them into a bond, takes paperwork, document checks and firms holding the loan files, which can take weeks.

Recording loans on a blockchain gives everyone involved the same up-to-date view of each loan and its payments. That can make it faster and cheaper to sell loans to investors and to borrow against them. Collateral can be locked and released automatically by a smart contract. Tokenization also changes repo, a very short-term loan where one firm borrows cash and hands over bonds, such as Treasuries, as collateral until it pays the cash back. Repo normally settles over a business day, but on a blockchain a repo loan can start and end within hours, so banks can borrow cash for just part of a day.

Figure Technologies records the home equity lines of credit it makes on its Provenance blockchain, then funds, sells and bundles them on the same system. JPMorgan’s Kinexys network runs intraday repo, where loans last only hours. JPMorgan and Banco Santander have traded repo on it since 2024, using tokenized US Treasuries and European government bonds as collateral.