As a seasoned crypto investor with a background in finance and technology, I’m thrilled to see Mastercard and major banking institutions in the US collaborating on testing distributed ledger technology for banking settlements. The potential application of shared ledger technology like Regulated Settlement Network (RSN) could significantly enhance the efficiency of cross-border settlements and reduce errors and fraud.
Mastercard, a leading payment processing and settlement company, is collaborating with significant American banks, including Citigroup, Visa, and JPMorgan, to experiment with the application of distributed ledger technology for banking transactions via tokenization.
The collaboration between major banking institutions and the payment processing company explores the implementation of Regulated Settlement Network (RSN) technology. RSN facilitates the simultaneous settlement of tokenized assets, including Treasury securities, investment-grade debt instruments, and bank money.
At present, financial instruments such as investment-grade bonds and funds derived from commercial banks operate independently. By implementing Real-Time Settlement Network (RSN), transactions will be processed on a unified platform. This is achieved by converting diverse assets into digital tokens and executing settlements through distributed ledger technology.
The current stage of RSN trials builds upon a preceding 12-week pilot initiative, which commenced towards the end of 2022. Initially, this experiment primarily explored cross-border and domestic US dollar transactions between financial institutions. Presently, the ongoing PoC RSN trials are centered around replicating US dollar settlements.
On May 8, Mastercard announced that the primary objective of this project lies in enhancing the effectiveness of cross-border transactions and minimizing the risks of mistakes and fraud.
Raj Dhamodharan, the Head of Blockchain and Digital Assets at Mastercard, expressed that incorporating shared ledger technology into dollar transactions could lead to the emergence of next-generation market infrastructures, characterized by continuously available and seamless programmable settlements.
As an analyst, I’ve observed two notable enhancements to the RSN Proof of Concept (PoC) in the realm of banking institutions. The USDF Consortium is now a direct participant, while Tassat Group joins as a contributor. Deloitte enters the scene as an advisory service provider. My role, as the program manager, falls under the Securities Industry and Financial Markets Association (SIFMA).
As a crypto investor, I can tell you that there are ten major banking institutions actively involved in the cryptocurrency space. These include Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp. Each of these entities plays a crucial role in shaping the future of crypto through their various initiatives and collaborations.
As a analyst, I can share that six additional entities will contribute their domain knowledge to our project. Among them are MITRE Corporation, BNY Mellon, Broadridge, DTCC, ISDA, and Tassat Group.
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2024-05-08 16:00