Mastercard Teams Up with Top U.S. Banks to Pioneer Tokenization in Banking Settlements Using Distributed Ledger Technology

Mastercard Teams Up with Top U.S. Banks to Pioneer Tokenization in Banking Settlements Using Distributed Ledger Technology

Mastercard has partnered with leading U.S. banking institutions including Citigroup, Visa, and JPMorgan to explore the application of distributed ledger technology (DLT) in streamlining banking settlements through a process known as tokenization.

The collaboration focuses on a shared-ledger technology called the Regulated Settlement Network (RSN). This innovative platform allows for the tokenization and collective settlement of diverse asset classes, such as U.S. Treasury bonds, high-quality corporate debt, and commercial bank money.

Traditionally, these assets operate on disparate systems. The RSN initiative seeks to unify these processes onto a single platform, converting assets into digital tokens that are then settled on a shared ledger.

This project is an expansion of a 12-week pilot initiated in late 2022, which initially concentrated on both cross-border and domestic dollar transactions between banks. The ongoing proof-of-concept phase of the RSN trials is now testing simulated settlements in U.S. dollars.

Mastercard announced on May 8 that this project aims to enhance the efficiency of cross-border settlements and reduce risks associated with errors and fraud.

Raj Dhamodharan, Mastercard’s Head of Blockchain and Digital Assets, emphasized the transformative potential of this technology. He stated, “The application of shared ledger technology to dollar settlements could usher in a new era of market infrastructure where programmable settlements are seamless and operational 24/7.”

The project has recently expanded to include new participants such as the USDF Consortium, which will take part directly, and the Tassat Group, which will contribute. Additionally, Deloitte is providing advisory services, and the program is managed by the Securities Industry and Financial Markets Association (SIFMA).

The RSN project now comprises ten major banking participants, including Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp.

Furthermore, six additional entities, including MITRE Corporation, BNY Mellon, Broadridge, the DTCC, ISDA, and Tassat Group, are contributing their expertise to the project.

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