U.S. Financial Industry to Explore Sharing Ledger Technology for Multiasset Transactions

As a researcher with a background in finance and technology, I find the collaboration between major U.S. financial industry companies to explore shared ledger technology for dollar settlements an intriguing development. The potential of bringing commercial-bank money, wholesale central-bank money, and securities such as U.S. Treasuries and investment-grade debt to a common regulated venue using this technology could unlock the next generation of market infrastructures.

Major financial institutions such as Citi, JPMorgan, Mastercard, Swift, and Deloitte are collaborating to experiment with the use of shared ledger technology for processing multi-asset transactions denominated in US dollars.

The research initiative, named Regulated Settlement Network (RSN), aims to investigate the possibility of unifying commercial bank funds, central bank money, and financial instruments like U.S. Treasuries and investment-grade debts in a regulated marketplace as mentioned in the communiqué obtained by CoinDesk.

The Federal Reserve Bank of New York’s Innovation Center in New York City will function as an impartial observer with a focus on technology.

In the modern digital economy, financial institutions like Citi must handle the settlement of various digital assets under clear legal guidelines. Debopama Sen, global head of payments at Citi Services, expressed eagerness to investigate the potential benefits of this undertaking.

In the United States, the debate over central bank digital currencies (CBDCs) has gained significant attention. While the Federal Reserve Chair Jerome Powell has made it clear that the Fed has no plans to delve into users’ data in such a system, CBDCs have emerged as a topic of discussion in the ongoing presidential election.

The individuals involved in the program have no obligation to continue with any subsequent stages of research once the initial phase is finished. The partnership aimed to achieve “greater agreement on the application of distributed ledger technology in the American financial sector.” The results will be made public upon completion.

“Raj Dhamodharan, Mastercard’s executive vice president for blockchain and digital assets, expressed that integrating shared ledger technology into dollar settlements has the potential to usher in a new era of market structures – one marked by continuous, round-the-clock, and seamless programmable settlements.”

The Securities Industry and Financial Markets Association (SIFMA), the securities industry’s internal standards body, will oversee the management of the program. TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp are among the other involved parties.

Nikhilesh De contributed to this story.