Mastercard, Citi and JPMorgan Test Settlement of Tokenized Assets in the US

Mastercard, in partnership with renowned US banks, is at the forefront of adopting innovative financial technologies by testing a shared ledger system to speed the settlement of tokenized assets. This movement aligns with the growing demand for efficiency and security in cross-border financial transactions.

This new approach, called the Regulated Settlement Network, is focused on optimizing dollar transactions and seeks to consolidate the settlement of commercial bank money and securities, including Treasury and other investment grade securities. The initiative aims not only to speed up settlement processes, but also to reduce the risks of errors and fraud.

“Mastercard is teaming up with financial institutions to test ledger technology that would enable common settlement of tokenized assets” – Bloomberg Crypto, May 8, 2024.

With asset tokenization and the use of distributed ledger technology, settlement processes are expected to be unified on a single platform. This development is an extension of a previous 12-week trial, which focused on domestic and international dollar payments and began in late 2022.

The current trial includes participation from financial giants such as Citigroup Inc., JPMorgan Chase & Co., Visa Inc., Swift, among others. The accumulated experience of entities such as Bank of New York Mellon Corp. and the International Swaps and Derivatives Association also contribute to the potential effectiveness of the test.

In parallel, major American banks are seeking support from the Securities and Exchange Commission (SEC) to engage in the newly approved Bitcoin ETF spot market. Groups such as the Bank Policy Institute and the American Bankers Association have requested specific changes to facilitate their participation in this new market segment.

Furthermore, the recent failure of Republic First Bank, which is the bank’s second collapse since 2023, highlights the challenges facing the banking sector, emphasizing the need for regulatory adjustments to improve the stability of the financial system.

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