Mastercard, in collaboration with renowned American financial institutions such as Citigroup, Visa, and JPMorgan, is leading the way in revolutionizing banking settlements by leveraging distributed ledger technology (DLT). This pioneering effort aims to streamline and secure the settlement process through tokenization, a method that converts different types of assets into digital tokens on a blockchain.
The Regulated Settlement Network (RSN), an innovative venture at the heart of this project, seeks to unify disparate settlement systems onto a single, shared ledger, thereby enhancing efficiency and reducing potential risks associated with cross-border and domestic transactions.
The key to this groundbreaking initiative lies in the RSN, a shared-ledger technology specifically designed to facilitate the settlement of tokenized assets. These assets encompass Treasury bonds, investment-grade debt instruments, and bank-issued money. Traditionally, these securities and monetary assets operate on separate systems, leading 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 enables the conversion of various asset classes into tokens, allowing for 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 design of the RSN reduces the likelihood of errors and fraud by enabling programmable settlements that operate 24/7, ensuring that transactions can be completed without any delays or complications.
Raj Dhamodharan, Mastercard’s Head of Blockchain and Digital Assets, emphasized the transformative potential of this technology, stating that it could pave the way for a new generation of market infrastructures where settlements are continuous and frictionless.
The project has garnered participation from a wide range of entities. The USDF Consortium and the Tassat Group have joined as direct participants and contributors, while Deloitte provides advisory services. The Securities Industry and Financial Markets Association (SIFMA) serves as 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. Furthermore, six additional entities, including the MITRE Corporation, BNY Mellon, Broadridge, the DTCC, ISDA, and Tassat Group, offer their expertise in different aspects of the project.
