ConsortiumGlobal Standards

Major Financial Institutions Promote and Test Utility Settlement Coin Concept

68views

BNY Mellon, Deutsche Bank, ICAP and Santander have joined UBS and Clearmatics to develop the Utility Settlement Coin (USC), a cryptocurrency model which aims to facilitate payment and settlement for institutional financial markets. The companies will collectively build on the successful outcome of initial explorations of the Utility Settlement Coin concept, which were performed by UBS and Clearmatics. BNY Mellon, Deutsche Bank, Santander and UBS are also members of the R3 consortium.

An asset-backed cryptocurrency instrument, Utility Settlement Coin is implemented on blockchain technology for use within global institutional financial markets. It is a series of cash assets, with a version for each of the major currencies (USD, EUR, GBP, CHF, etc.) and is convertible at parity with a bank deposit in the corresponding currency. USC is fully backed by cash assets held at a central bank.

The focus of the work will consist of financial structuring of the USC and wider market structure implications; as well as market integration points for a fully operational utility settlement coin for future use by institutions. Additionally, Clearmatics is tasked with delivering early releases of the technology platform to underpin the concept. Dialogue with central banks and regulators will take place to develop a regulation compliant, robust and efficient structure within which the USC can be deployed.

Hyder Jaffrey, Head of Strategic Investment & FinTech Innovation at UBS Investment Bank, explained: “Digital cash is a core component of a future financial market fabric based on blockchain technologies. There are several digital cash models being explored across the Street. The Utility Settlement Coin is focussed on facilitating a new model for digital central bank cash.”

The Utility Settlement Coin concept will be developed through a series of short iterative phases and platform deployments. At each stage the aim is to increase the number of market participants, broadening engagement, connectivity and network effect.

Robert Sams, Founder and CEO of Clearmatics Technologies LTD, said: “Cash is a leg to almost every trade, so this project is key to unlocking the benefits that the industry can gain from distributed automation technology in clearing, settlement and collateral management.”

Managing Director at Euclid Opportunities, Michael McFadgen remarked: “We believe digital cash will be integral to next generation market infrastructure and will deliver significant benefits to our clients.”

Paul Maley, Managing Director of the Institutional Client Group at Deutsche Bank, commented: “As today’s settlement and clearing is a process involving many institutions, it’s vital that we collaborate with our peers to develop viable alternatives to current models, creating new digital capabilities for the financial services industry.”

Head of R&D at Santander, Julio Faura noted: “Recent discussion of digital currencies by central banks and regulators has confirmed their potential significance. The USC is an essential step towards a future financial market on distributed ledger technologies,”

Saket Sharma, Head of Treasury Services Technology at BNY Mellon, added: “The USC initiative provides an exciting opportunity to work closely with other industry thought leaders and the regulatory community to explore the possibilities of this technology.”

Matthew Warner
Based near Windsor, England, Matthew Warner is an enthusiast for innovative, cutting edge technologies. He is a B.Eng. graduate in engineering with honors from the University of Warwick and also holds an PGCE in education degree. Matthew is a member of Mensa.