Mastercard, in collaboration with prominent American financial institutions such as Citigroup, Visa, and JPMorgan, is spearheading a revolutionary approach to banking settlements using distributed ledger technology (DLT). This groundbreaking endeavor, called the Regulated Settlement Network (RSN), aims to streamline and secure the settlement process by employing tokenization, a method that converts different types of assets into digital tokens on a blockchain.
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, initially focused on dollar payments, have now expanded to include a wider range of settlements denominated in U.S. dollars.
Mastercard’s initiative not only simplifies transactions but also enhances 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, emphasized the transformative potential of this technology, noting that it could pave the way for a new generation of market infrastructures where settlements are continuous and frictionless.
The project has attracted a diverse range of participants, including the USDF Consortium and the Tassat Group, who 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.
