Mastercard Joins Citi and JPMorgan to Test DLT Settlements

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As an analyst with a background in financial technology and blockchain, I am excited about Mastercard’s participation in the RSN trial for settling transactions using distributed ledger technology (DLT). The potential for faster, easier, and more secure cross-border transactions is significant, especially given the current challenges of errors and fraud.

Mastercard, a leading American payments corporation, announced its involvement in a trial alongside other notable banks in the United States, utilizing distributed ledger technology (DLT) to investigate the feasibility of processing financial transactions.

Based on a Bloomberg article published on Wednesday, Mastercard, Citibank, and JPMorgan are planning to trial a shared ledger platform for settling digitally represented assets, including central bank currency, US Treasury bonds, and investment-grade debt securities.

Assessing Cross-Border Transactions with RSN

As a crypto investor, I’m excited to be part of the Regulated Settlement Network (RSN) trial. In this program, we’ll be utilizing the PoC (proof-of-concept) mechanism to run mock transactions in US dollars within the network. This will give us valuable insights into how the RSN functions and helps us prepare for future real-life scenarios.

The primary goal of this trial is to evaluate if conducting USD transactions on a unified, law-abiding platform could expedite, simplify, and strengthen cross-border transactions’ security. Essentially, we aim to minimize the likelihood of mistakes and fraud during the settlement procedure.

Raj Dhamodharan, a high-ranking blockchain specialist at Mastercard, emphasized the significance of collaboration among companies in investigating how blockchain technology can offer viable answers to practical issues.

Additionally, he mentioned that finishing the trial would potentially lead to introducing groundbreaking financial solutions and advanced financial frameworks into the marketplace, facilitating seamless monetary transactions.

“Applying shared ledger technology to dollar transactions can lead to the development of the next-generation market infrastructures,” he explained. “With this technology, programmable settlements would be available around the clock and free from friction.”

Additional Players in the DLT Settlement Trial

Among Mastercard, Citi, JPMorgan, as well as other companies including Bancorp, Wells Fargo & Co., Visa Inc., Swift, TD Bank NA, and Zions Bancorp, a total of around ten American financial services firms have been selected for the upcoming trial.

In this trial, companies including BNY Mellon, Broadridge, DTCC, ISDA, and Tassat Group will act as key contributors, bringing their specialized knowledge to the table. Additionally, financial institutions like the New York Innovation Center at the Federal Reserve Bank of New York will monitor the progress of these participants as they explore the use of tokenized settlement assets.

Advancing the DLT Settlement Trial with SIFMA

According to Bloomberg’s latest update, the upcoming trial is an expansion of a 12-week study carried out in the year 2022. Labeled as the Regulated Liability Network (RLN), this previous exploration primarily focused on domestic interbank transactions and cross-border deals involving US dollar denominations.

As a crypto investor, I would put it this way: Just like the previous project, the new undertaking is going to be spearheaded and regulated by the Securities Industry and Financial Markets Association (SIFMA) in the same capacity as an industry leader.

Charles de Simone, the Managing Director at SIFMA, made it clear in a separate declaration that the objective of this endeavor is to discover innovations concerning digital forms of US dollars and securities. Market players are determined to create systems that enhance the effectiveness and robustness of capital markets by leveraging such advancements.

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2024-05-08 16:09