Financial Giants Collaborate on Regulated Settlement Network (RSN) Proof-of-Concept

In a concerted effort to modernize settlement processes and enhance liquidity management within the U.S. financial sector, key players have embarked on a proof-of-concept (PoC) initiative known as the Regulated Settlement Network (RSN). The project aims to leverage shared ledger technology to facilitate multi-asset transactions, offering potential benefits for domestic users of U.S. dollars and Treasury securities.

The RSN PoC, spearheaded by the Securities Industry and Financial Markets Association (SIFMA), marks a significant milestone in the exploration of innovative settlement models. It brings together prominent institutions including Citi, J.P. Morgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa, and Zions Bancorp.

At its core, the RSN initiative seeks to address existing inefficiencies inherent in traditional settlement systems. Currently, commercial bank money, wholesale central bank money, and various securities operate on separate platforms, leading to fragmented processes. By tokenizing these assets and settling them on a common regulated venue, the RSN aims to streamline operations and enhance liquidity management.

The PoC will simulate Delivery versus Payment (DVP) transactions denominated in U.S. dollars, offering insights into the feasibility and potential benefits of shared ledger technology. It represents a collaborative effort by industry stakeholders to explore new avenues for settlement optimization.

One of the key objectives of the RSN PoC is to ensure compliance with existing legal frameworks. Through rigorous legal analysis, participants will assess the compatibility of the envisioned network with regulatory requirements, highlighting any necessary amendments to facilitate its implementation.

Industry leaders have expressed enthusiasm for the project, recognizing its potential to drive significant advancements in market infrastructure. Raj Dhamodharan, Executive Vice President of Blockchain & Digital Assets at Mastercard, emphasized the transformative impact of shared ledger technology on settlement processes, envisioning a future where programmable settlements are 24/7 and frictionless.

The involvement of major banking institutions underscores the industry’s commitment to innovation and collaboration. By harnessing the collective expertise of participants and leveraging emerging technologies, the RSN initiative aims to pave the way for a more efficient and resilient financial ecosystem.

As the RSN PoC progresses, stakeholders anticipate valuable insights that will inform future research and development efforts. By publishing the findings of the project, participants aim to contribute to the ongoing evolution of settlement models, driving progress towards a more interconnected and digitally-driven financial landscape.