Mastercard Collaborates with Major US Banks to Test Tokenized Asset Settlement
In an important development, global payment provider Mastercard has joined forces with major US banks including JP Morgan, Citi Group, and Visa to test shared-ledger technology for settling tokenized assets. This collaboration aims to explore the use of a shared-ledger technology called the Regulated Settlement Network (RSN) for the collective settlement of tokenized assets such as treasury and funds from commercial banks. Currently, these assets operate on different platforms, but RSN will enable their settlement on a single platform by converting them into tokens and settling them on a distributed ledger. The primary objective of this test is to enhance cross-border transactions.
Mastercard’s Aim to Improve Cross-Border Transactions
The partnership between Mastercard and the participating financial institutions seeks to leverage shared-ledger technology to improve cross-border transactions. By settling tokenized assets on a single platform, Mastercard aims to streamline the settlement procedures and ensure 24/7 programmable settlements that are frictionless. Raj Dhamodharan, Head of Blockchain and Digital Assets at Mastercard, believes that the application of shared ledger technology to dollar settlements could unlock the next generation of market infrastructures.
Expansion of Previous Trial
This new trial builds upon a previous test conducted in 2022, which focused on payments made in US dollars and cross-border transactions. The current trial involves around 10 financial institutions, including Wells Fargo, Swift, TD Bank N.A., U.S. Bank, USDF, and Zions Bancorp. The participation of these prominent firms reflects the significance of this project and highlights their willingness to adapt to the evolving digital era.
Hot Take: Potential Game-Changer for the Financial Space
The utilization of ledger technology in settling tokenized assets has the potential to revolutionize the financial space. Raj Dhamodharan, Head of Blockchain and Digital Assets at Mastercard, expressed that the application of shared ledger technology to dollar settlements could pave the way for the next generation of market infrastructures, where programmable settlements are available 24/7 and free from friction.
Disclaimer: Not Financial Advice
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