Mastercard, alongside major US banks like Citigroup, Visa, and JPMorgan, has embarked on a collaboration to explore the potential of distributed ledger technology (DLT) for banking settlements through tokenization.
The alliance aims to test a shared-ledger platform known as the Regulated Settlement Network (RSN). RSN facilitates the collective settlement of tokenized assets such as Treasury securities, investment-grade debt, and funds from commercial banks.
Traditionally, different securities and assets operate on separate systems. With RSN, settlement processes will be streamlined onto a unified platform by tokenizing various assets and conducting settlements on a distributed ledger.
Building upon a 12-week pilot phase initiated in late 2022, the ongoing trials of RSN focus on simulating settlements denominated in US dollars. Initially focused on cross-border and domestic dollar payments between banks, the project now targets enhancing efficiency in cross-border settlements and mitigating risks of error and fraud.
Raj Dhamodharan, Head of Blockchain and Digital Assets at Mastercard, expressed optimism about the potential of shared ledger technology in revolutionizing market infrastructures, envisioning programmable settlements that are seamless and available round the clock.
The RSN Proof-of-Concept (PoC) trials have witnessed significant participation from banking institutions, including the USDF Consortium and the Tassat Group, with advisory services provided by Deloitte. The Securities Industry and Financial Markets Association will manage the program.
Ten major banking entities, including Citi, JPMorgan, and Visa, are actively participating in the project, along with six additional contributors offering subject-matter expertise, such as MITRE Corporation, BNY Mellon, and Broadridge.
May 2024, Cryptoniteuae