News
Mastercard and banks are reinventing transactions!
Wednesday 8 May 2024 ▪ 4 minute read ▪ by Evans S.
A breeze of renewal is blowing in the world of cryptocurrencies, led by giants such as Mastercard, in alliance with prestigious institutions such as Citi and JPMorgan. These entities, once traditional gatekeepers of the financial world, are now venturing into the realm of asset tokenization. This phenomenon, characterized by the use of a shared ledger for the settlement of tokenized assets, promises to radically reshape our conception of banking transactions.
A strategic partnership for greater efficiency
The heart of this cryptographic innovation lies in the experimentation of a shared ledger, in which entities such as US Bancorp, Wells Fargo and Visa they are involved too.
This system will have two main functions. On the one hand, it will simulate crypto transactions in US dollars. On the other hand, it will guarantee greater liquidity and security.
These institutions are experimenting with new methods for two reasons. They want to reduce errors and fraud. In parallel, they aim to speed up the process of cross-border transactions.
At the heart of this revolution is blockchain technology. Facilitates faster and more transparent liquidation of tokenized assets. Such assets include commercial bank money and high-quality debt securities.
Mastercard plays a key role with its Regulated Settlement Network (RSN) project. This project aims to establish a strong legal framework. This framework will facilitate the integration of cryptographic innovations into the digital economy.
The involvement of large companies such as Swift and Deloitte demonstrates the importance of this project. It has international reach and disruptive potential. These collaborations signify a shared desire to adapt the financial sector to the digital age.
Cryptocurrency regulatory challenges on the horizon
In the United States, the debate over central bank digital currencies (CBDCs) is gaining momentum. People like Jerome Powell have expressed reservations. They highlight issues of privacy and data surveillance by government agencies.
The Federal Reserve Bank’s New York Innovation Center plays a crucial role. As a technical observer, he ensures that the development of these technologies complies with regulations and market expectations.
Finding consensus on the use of cryptocurrencies in the American financial system is a significant challenge. Program participants are hesitant to engage in further phases of research. This demonstrates the caution with which this innovation is approached.
Towards a programmable and frictionless future
The idea of a programmable settlement system, which operates seamlessly and without friction, is slowly becoming a reality. Mastercard’s Raj Dhamodharan highlights the benefits of such infrastructure, which could fundamentally transform financial markets (including cryptocurrencies).
As reported by coindeskwith participants like the Securities Industry and Financial Markets Association (SIFMA) and banks like TD Bank and Zions Bancorp, the securities industry is also preparing to integrate these technological advances into its operations.
The project is headed towards a future where transactions will be instant, secure and, above all, integrated into a well-defined legal framework. This heralds a new era for financial transactions, with cryptocurrencies playing a central role.
As Mastercard and its partners continue their testing and search for consensus, the global financial landscape is on the brink of a major transformation. Tokenized transactions, supported by solid infrastructure and strategic partnerships, promise to redefine the standards of speed, security and efficiency in the world of finance. It is a horizon full of opportunities and challenges, ready to be explored and mastered. In the meantime, bitcoin collapses below 2014 thresholds.
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Evans S.
Fascinated by bitcoin since 2017, Evariste has not stopped researching on the topic. If his main interest is in trading, the sage is desperate to discover all the advanced centers on cryptocurrencies. As an editor, he aspires to consistently provide high-quality work that reflects the state of the industry as a whole.
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.