T. Koroye
University of Bradford, School of Law, BD7 1DP. Bradford, United Kingdom
Tel.: + 44 7707266064
E-mail: Tkoroye2@bradford.ac.uk
Received: 25 June 2024 Revised: 30 December 2024 Accepted: 31 January 2025
Published: 24 March 2025
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Abstract: This paper examines the potential risks associated with rent-seeking behaviour in the tokenisation of bank assets, particularly by too-big-to-fail (TBTF) banks using private blockchains. As of November 2024, JPMorgan's Onyx platform was rebranded to Kinexys Digital Assets (KDA), processing over $1.5 trillion in transactions and averaging $2 billion in daily volume, demonstrating both the platform's growth and the increasing institutional adoption of private blockchain technology. This paper argues that the use of private blockchains for asset tokenisation, as evidenced by KDA's rapid expansion, may enable banks to engage in market manipulation and rent-seeking, ultimately harming consumers and potentially contributing to the formation of market bubbles. The platform's significant transaction volumes and planned integration with traditional banking services, including cross-border FX settlement, amplify these concerns. By drawing on historical examples of banks abusing markets and exploring the ethical implications of tokenisation, this paper highlights the urgent need for regulatory oversight to mitigate these risks and protect consumer interests. The lack of transparency and regulatory oversight in private blockchains, combined with their increasing scale and integration with traditional financial services, creates a breeding ground for rent-seeking and market manipulation, necessitating swift regulatory intervention to mitigate systemic risks.
Keywords: Rent-seeking, Asset tokenisation, Private blockchains, Market manipulation, Bubble formation, Consumer protection, Regulatory oversight.
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