Mastercard, in collaboration with leading American financial giants like Citigroup, Visa, and JPMorgan, is pioneering a new approach to banking settlements through the use of distributed ledger technology (DLT). This initiative aims to streamline and secure the settlement process by employing tokenization, a method that converts various types of assets into digital tokens on a blockchain.
This groundbreaking venture, known as the Regulated Settlement Network (RSN), seeks to unify disparate settlement systems onto a single, shared ledger, enhancing efficiency and reducing potential risks associated with cross-border and domestic transactions.
Revolutionizing Settlements with Tokenized Assets:
The core of this innovative project lies in the RSN, a shared-ledger technology designed to facilitate the settlement of tokenized assets. These assets include Treasury bonds, investment-grade debt instruments, and bank-issued money. Traditionally, these securities and monetary assets operate on separate systems, which can lead to inefficiencies and increased operational risks.
By tokenizing these assets and settling them on a unified distributed ledger, Mastercard and its banking partners aim to streamline the entire settlement process. This approach allows for the conversion of various asset classes into tokens, enabling seamless and simultaneous settlements on a single platform. The ongoing proof-of-concept trials, which started as a focused test on dollar payments, have now expanded to include a wider range of settlements, all denominated in U.S. dollars.
Mastercard’s initiative is not just about simplifying transactions but also about enhancing the security and reliability of these processes. The RSN’s design reduces the likelihood of errors and fraud by enabling programmable settlements that operate round the clock, ensuring that transactions can be completed without delays or complications.
Raj Dhamodharan, Mastercard’s Head of Blockchain and Digital Assets, highlighted the transformative potential of this technology, noting that it could pave the way for a new generation of market infrastructures where settlements are both continuous and frictionless.
Broader Participation and Expertise
The project has attracted a broad range of participants, including the USDF Consortium and the Tassat Group, which have joined as direct participants and contributors, respectively. Additionally, Deloitte is providing advisory services, while the Securities Industry and Financial Markets Association (SIFMA) is the program manager.
The expanded group of participants now includes ten major banking institutions: Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp. Moreover, six more entities, including the MITRE Corporation, BNY Mellon, Broadridge, the DTCC, ISDA, and Tassat Group, are offering their expertise in various aspects of the project.