- Major American financial institutions are teaming up to investigate the potential of an on-chain settlement system for tokenized cash and assets.
- The initiative, dubbed the Regulated Settlement Network (RSN) proof-of-concept (PoC), is exploring the viability of a shared ledger for settling tokenized commercial bank money, wholesale central bank money, U.S. Treasury securities, and other tokenized assets.
- Participants in the program include Citi, J.P. Morgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp, with advisory services provided by Deloitte.
Top American financial institutions are exploring the feasibility of an on-chain settlement system for tokenized assets, launching a proof-of-concept initiative known as the Regulated Settlement Network.
Exploring the Potential of On-Chain Settlement
According to a recent announcement from the Securities Industry and Financial Markets Association (SIFMA), a group of members from the regulated U.S. financial sector have launched a Regulated Settlement Network (RSN) proof-of-concept (PoC). The aim of this initiative is 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.
Participants and Goals of the RSN PoC
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.
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.
Industry Reactions and Future Implications
Raj Dhamodharan, executive vice president of blockchain & digital assets at Mastercard, commented on the initiative, stating that 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. He further added that 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.
Conclusion
The launch of the RSN PoC by major American financial institutions signifies a significant step towards the exploration and potential adoption of blockchain technology in traditional financial systems. As the initiative progresses, it will be interesting to observe how the potential of on-chain settlements for tokenized assets is realized and what impact this could have on the broader financial landscape.
