America’s biggest financial institutions are collaborating on a new initiative to explore an on-chain settlement system for tokenized cash and assets.
According to an announcement from the Securities Industry and Financial Markets Association (SIFMA), members of the “regulated U.S. financial sector” have launched a Regulated Settlement Network (RSN) proof-of-concept (PoC) that aims to explore the feasibility of a shared ledger that settles tokenized commercial bank money, wholesale central bank money, U.S. Treasury securities and other tokenized assets.
Members of the program include Citi, J.P. Morgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp. Big 4 accounting firm Deloitte will be providing advisory services, and two additional unnamed vendors will be providing technology infrastructure and legal analysis.
SIFMA is named as the project manager for the program.
According to the announcement, the RSN PoC aims to be an “interoperable network for multi-asset transactions that aim to operate on a 24/7, programmable shared ledger.”
“Building on the results of a previous industry PoC, this project will further research the settlement of tokenized cash and securities on a common system.
The RSN PoC will be conducted in a test environment and will simulate multi-asset transactions in U.S. dollars. The PoC aims to highlight opportunities to improve the operation of multi-asset settlements for domestic users of financial instruments denominated in U.S. dollars.”
Says Raj Dhamodharan, executive vice president of blockchain & digital assets at Mastercard,
“As blockchain technology continues to mature, it will be critical for public and private organizations to partner closely to explore how it can be applied to solve for real-world pain points and improve efficiencies. 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.”
Some crypto industry leaders have predicted the adoption of blockchain and tokenized transactions by the traditional financial sector.
Recently, Chainlink (LINK) creator Sergey Nazarov said that a transition was underway, where the legacy financial system migrated its infrastructure into blockchain and smart contract, powered by oracle networks.
“After spending the last few months visiting and speaking to many of the largest central banks, commercial banks and financial market infrastructures, across the world’s top financial centers of New York, London, Sydney, Singapore, Hong Kong, Riyadh and now Dubai/Abu Dhabi, it is now clear to me that the transition of the global financial system into the blockchain/smart contract format, enabled by oracle networks, is well underway and in my opinion, inevitable.”
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