Payment processing leader Mastercard partnered with several major United States banks to trial the use of blockchain technology for tokenized asset settlement.
At present, the settlement of different asset types occurs across disparate systems, leading to potential delays, errors, and vulnerability to fraud. The process could become seamless, automated, and secure by tokenizing assets and settling them on RSN's blockchain network.
Accordingly, the initiative is known as the Regulated Settlement Network (RSN), which aims to increase efficiency and reduce fraud by enabling the tokenization and settlement of different asset classes.
Consequently, the settlement will cover the treasury securities, investment-grade debt instruments, and bank deposits on a shared distributed ledger.
The RSN trials were built upon a 12-week pilot program that focused on domestic and cross-border dollar payments between banks. This expanded phase will simulate settlements denominated in US dollars across a broader range of tokenized assets.
In addition to Mastercard, major players like Citigroup, JPMorgan, Visa, and the USDF Consortium, representing interbank tokenized deposit networks, have joined this initiative.
Moreover, advisory giants like Deloitte and the Securities Industry and Financial Markets Association (SIFMA) are also involved.
Remarkably, the trials represent a significant step towards modernizing financial market infrastructure and leveraging blockchain's capabilities for enhanced transparency, security, and operational efficiency in high-value transactions.
The trials represent a significant step towards modernizing financial market infrastructure and leveraging blockchain's capabilities for enhanced transparency, security, and operational efficiency in high-value transactions.
Meanwhile, the test may mean something other than that the financial entities involved will also pursue commercial deployment.
In related news, Mastercard has formalized its intent to collaborate with The BENEFIT Company (BENEFIT), a prominent fintech player in Bahrain, and the nation's electronic payment infrastructure operator.