Major Banks To Invest $50M USD In Blockchain Settlement Project

Blockchain, News | May 20, 2019 By:

Some of the world’s largest banks are reportedly partnering to develop a new digital cash settlement system using blockchain technology.

People familiar with the plans told Reuters that around a dozen banks will invest $50 million in a new entity called Fnality, which would run the previously disclosed project, known as the “utility settlement coin (USC),” first proposed by Swiss bank UBS Group AG and London-based technology startup Clearmatics in 2015. The project aims to develop a system to make clearing and settlement in financial markets more efficient.

The USC project would consist of a digital cash instrument that banks could use to settle transactions. The coin would be a digital cash equivalent of central bank-backed currencies like the dollar or euro that would run on blockchain-based technology. It would be convertible at parity and backed by cash assets held at a central bank. Spending the digital coin would reportedly be the same as spending the fiat currency it is paired with.

The names of the banks involved in the creation of Fnality remain unclear, but some banks that had previously disclosed they were working on earlier phases of the USC project include UBS, Banco Santander, Bank of New York Mellon Corp, State Street Corp, Credit Suisse Group AG, Barclays PLC, HSBC Holdings Plc and Deutsche Bank AG.

“We are a member of the USC Project and can confirm that the Research & Development phase is coming to an end,” a spokeswoman for Barclays said, but refrained from commenting on the investment deal.

The source said that while the deal has not been finalized and subject to change, the new system could launch in 2020.