Mastercard Teams Up With Major US Banks for Tokenized Settlements

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As a researcher with a background in blockchain technology and financial markets, I am thrilled to see Mastercard leading the charge in partnering with major US banks for tokenized settlement trials using distributed ledger technology. The Regulated Settlement Network (RSN) is an innovative initiative that could revolutionize market infrastructures by facilitating the collective settlement of various asset classes on a single, shared ledger platform.

Three prominent American financial institutions, including Citigroup, Visa, and JPMorgan, have teamed up with Mastercard to experiment with the application of tokenization and distributed ledger technology in banking transactions.

As a crypto investor, I would describe this partnership as follows: Through this collaboration, we aim to simplify the process of settling various financial assets on a single, secure network known as the Regulated Settlement Network (RSN). This innovative system empowers us to collectively settle tokenized versions of assets such as Treasuries, investment-grade bonds, and commercial bank money. By leveraging RSN’s capabilities, we can streamline transactions and enhance overall efficiency in our investment operations.

At present, different institutions handle securities such as investment-grade debt and assets from commercial banks separately. With RSN, these assets will be transformed into tokens and processed through a unified distributed ledger system, thereby improving both efficiency and security in the settlement procedures.

Mastercard collaborates with leading American banks to trial distributed ledger technology and tokenized settlements 💰💳

The alliance seeks to explore the use of shared-ledger technology, specifically Regulated Ledger Consortium (RLC), for banking transactions through tokenization

This partnership represents an important step towards potential implementation of innovative and secure payment solutions.

— xtanc1on (@xtanc1on) May 8, 2024

Expansion of Pilot Phase and Project Goals

As an analyst, I would describe it as follows: I’m currently engaged in the trial phase of a project that builds upon a 12-week pilot initiative concluded at the end of last year. During this earlier stage, we focused on facilitating cross-border and domestic dollar transactions between banks. Now, during the ongoing trials, we are simulating U.S. dollar settlements as part of our proof-of-concept exploration.

Based on Mastercard’s announcement on May 8, the objective of this initiative is twofold: enhancing the speed of cross-border transactions and reducing the risks of mistakes and fraudulent activities.

Raj Dhamodharan, the mastermind of blockchain and digital assets at Mastercard, underscored the transformative potential of integrating shared ledger technology into dollar transactions. This innovation could significantly upgrade market infrastructures, enabling programmable settlements to function smoothly and continuously around the clock.

Key Participants and Contributions

As a crypto investor, I’m excited to share that the recent Proof of Concept (PoC) for RSN includes some significant contributions from key institutions. I’ve personally noticed the addition of interbank tokenized deposit networks, with the USDF Consortium joining directly and Tassat Group contributing. Deloitte is providing valuable advisory services in this project, while the Securities Industry and Financial Markets Association takes on the role of program manager.

Ten significant banking entities take part in this initiative: Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp. Six additional contributors, which include the MITRE Corporation (a nonprofit), BNY Mellon, Broadridge, the Depository Trust & Clearing Corporation (DTCC), ISDA, and Tassat Group, contribute their expertise to the project.

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2024-05-08 21:25