Mastercard, in collaboration with prominent banking institutions including Citigroup, Visa, and JPMorgan, has embarked on a pioneering initiative to explore the application of distributed ledger technology (DLT) for banking settlements through tokenization.
This strategic partnership seeks to evaluate the efficacy of the Regulated Settlement Network (RSN), a shared-ledger platform facilitating the collective settlement of tokenized assets such as Treasuries, investment-grade debt instruments, and commercial bank funds.
Traditionally, diverse financial securities and assets have operated on disparate systems, necessitating intricate settlement procedures. The RSN platform, however, endeavors to streamline these processes by converting various assets into tokens and executing settlements on a unified distributed ledger.
Building upon a preliminary 12-week pilot phase initiated in late 2022, the ongoing proof-of-concept (PoC) trials of RSN represent a significant expansion. Initially focused on cross-border and domestic dollar payments between banks, the current trials concentrate on simulating settlements denominated in the United States dollar.
In a statement issued on May 8, Mastercard underscored the project’s objective of enhancing the efficiency of cross-border settlements while mitigating the risks associated with errors and fraudulent activities. Raj Dhamodharan, Head of Blockchain and Digital Assets at Mastercard, emphasized the transformative potential of shared ledger technology in enabling programmable settlements characterized by 24/7 availability and frictionless transactions.
Noteworthy additions to the consortium of participating banking institutions include interbank tokenized deposit networks, with the USDF Consortium and the Tassat Group assuming pivotal roles. Deloitte, a leading advisory firm, provides consultative support, while the Securities Industry and Financial Markets Association serves as the program manager.
The roster of ten participant banking giants comprises Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp. Additionally, six project participants, including the MITRE Corporation, BNY Mellon, Broadridge, the DTCC, ISDA, and the Tassat Group, contribute their specialized expertise to the initiative.
The collaborative endeavor spearheaded by Mastercard and its esteemed partners underscores the commitment of industry leaders to harnessing innovative technologies to enhance the efficiency and integrity of financial settlements on a global scale.
