US Financial Giants Test Shared Ledger Tech

The U.S. financial system is exploring the use of shared ledger technology for multi-asset transactions.

The project will involve a number of high-profile financial institutions (FIs) — including Visa, Mastercard, Citi and JPMorgan — managed by the Securities Industry and Financial Markets Association (SIFMA).

“In the current financial system, commercial bank money, wholesale central bank money, and securities such as U.S. Treasuries and investment grade debt all reside on separate systems,” SIMFA said in a Wednesday (May 8) news release.

“The tokenization of these instruments may enable settlement on a common regulated venue established under existing legal frameworks.”

To examine this potential, the association added, the FIs have launched a Regulated Settlement Network (RSN) proof-of-concept (PoC) that will consider the feasibility of shared ledger technology to settle tokenized commercial bank money, wholesale central bank money, U.S. Treasury securities and other tokenized assets.

“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,” Raj Dhamodharan, the Mastercard executive vice president overseeing blockchain and digital assets, said in a statement to PYMNTS.

“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 added.

Elsewhere on the blockchain front, PYMNTS recently examined the technology through the lens of tokenization of real-world assets (RWA).

“Tokenized RWAs have the potential to make assets more liquid, accessible and efficient while enhancing transparency, security and global reach,” that report said.

“Representing RWAs on the blockchain … can transform the way ownership of assets is recorded and enable new functions.”

However, PYMNTS wrote, the tokenization of RWAs has yet to take off, in part because of the lack of a widely interoperable infrastructure spanning the private and public payment sectors.

“The true intrinsic value of blockchain, which is around programmability of transactions, immutability of transactions, and the ability to do delivery versus payment and always-on types of payments, has yet to be unlocked,” Mastercard Chief Digital Officer Jorn Lambert told PYMNTS last summer.

“Until there exists the ability to actually develop financially regulated applications on the blockchain, the benefits will never go mainstream,” Lambert said. “Regulated financial institutions are crucial for [tokenized blockchain money movement vehicles] to truly scale.”

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