Mastercard Joins Citi and JPMorgan to Test DLT Settlements 

Mastercard, an American multinational payments company, said it has joined other prominent banks in the country to participate in a trial involving distributed ledger technology (DLT) to explore the potential for settling transactions.

According to a Bloomberg report on Wednesday, Mastercard, Citi, and JPMorgan will test a shared-ledger system that allows for the settlement of tokenized assets such as wholesale central bank money, US Treasuries, and investment-grade debt securities.

Assessing Cross-Border Transactions with RSN

The trial is part of the Regulated Settlement Network (RSN) program, which involves using its proof-of-concept (PoC) mechanism to simulate transactions in US dollars.

The main objective of the trial is to assess whether settling transactions on a common, regulated platform, following existing laws, can make cross-border transactions in USD faster, easier, and more secure. Ultimately, the aim is to reduce the risk of errors and fraud in the settlement process.

Raj Dhamodharan, a senior blockchain executive at Mastercard, acknowledged the importance of companies coming together to explore how blockchain can provide solutions to real-world challenges.

He also added that the successful completion of the trial could bring about the launch of innovative solutions and other financial infrastructure to the market to enable easy financial settlements.

“The application of shared ledger technology to dollar settlements could unlock the next generation of market infrastructures – where programmable settlements are 24/7 and frictionless,” he said.

Additional Players in the DLT Settlement Trial

In addition to Mastercard, Citi, and JPMorgan, other companies such as Bancorp, Wells Fargo & Co., Visa Inc., Swift, TD Bank NA, and Zions Bancorp will participate in the new trial. Approximately ten financial services firms in the United States have been chosen for the experiment.

The trial will see companies such as BNY Mellon, Broadridge, the DTCC, ISDA, and Tassat Group serve as project contributors, providing their expertise for it. Other financial institutions, such as the New York Innovation Center at the Federal Reserve Bank of New York, will observe the participants’ research and experimentation with tokenized settlement assets.

Advancing the DLT Settlement Trial with SIFMA

Per the Bloomberg report, the new trial is an extension of a 12-week test conducted in 2022. The previous experiment dubbed the Regulated Liability Network (RLN), specifically targeted domestic interbank payments and cross-border transactions involving US dollar denominations.

Like the previous pilot, the new initiative will be managed and controlled by the Securities Industry and Financial Markets Association (SIFMA).

In a separate statement, Charles de Simone, the Managing Director at SIFMA, said the experiment aims to find new advancements involving digital versions of US dollars and securities as market participants strive to develop solutions that improve capital markets’ efficiency and resilience.

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