JPMorgan, Citi, Mastercard, Visa join forces to test tokenized asset settlement on shared ledger
The Federal Reserve's NYIC will observe this trial to gauge its impact on future financial innovations.
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A group of leading financial institutions, including JPMorgan, Citi, Mastercard, Visa, Swift, TD Bank N.A., US Bank, USDF, Wells Fargo, and Zions Bancorp, have initiated a proof-of-concept (PoC) for a Regulated Settlement Network (RSN). The project will explore the use of shared ledger technology for the settlement of tokenized assets, according to a press release published on Wednesday.
Debopama Sen, Global Head of Payments at Citi Services, said the project could create a more general system for electronically settling all sorts of financial transactions while still following existing regulations.
“Citi looks forward to exploring the opportunities of this project, which brings together assets that currently live in separate silos into a 24/7, programmable, multi-asset settlement environment – and aims to do that in a collaborative manner across public and private sectors,” Sen noted.
Currently, settling financial transactions involves separate systems for different types of assets. This can be slow and inefficient. The RSN PoC is exploring a new way to handle these transactions. Its goal is to see if creating a 24/7 system that facilitates interoperable multi-asset transactions on a single, secure platform is feasible.
Raj Dhamodharan, Executive Vice President, Blockchain & Digital Assets at Mastercard, highlighted the need for collaboration between the public and private sectors to explore how blockchain technology can address real-world issues and improve efficiency.
“The application of shared ledger technology to dollar settlements could unlock the next generation of market infrastructures – where programmable settlements are 24/7 and frictionless,” Dhamodharan said.
“It is great to collaborate with our industry partners and the public sector on the US Regulated Settlement Network. RSN presents an opportunity to explore the impact of innovations in shared ledger technology on settlement, an area often constrained by siloed infrastructures and processes,” Amanda CR Morgan, Senior Product Manager, Visa Money Movement, noted.
Managed by the Securities Industry and Financial Markets Association (SIFMA), this initial exploration will focus on simulating transactions in US dollars, aiming to demonstrate potential improvements in multi-asset settlement operations.
Charles de Simone, Managing Director at SIFMA, said the project is an essential step in exploring how digital forms of money and securities can be used efficiently and securely in the financial markets.
“This exploration of shared ledger technology is an important initiative to explore innovations working with digital forms of USD cash and securities, as market participants continue to innovate to support efficient, resilient capital markets,” he said.
The PoC also includes a group of US-based project contributors and technical observers, such as the New York Innovation Center at the Federal Reserve Bank of New York, which will monitor the use of shared ledger technology for regulated financial institution transfers, as noted in the press release.
After testing, the participants will share their findings to help shape the future of financial settlements. However, there is no commitment to continue research after this initial exploration.
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