Big banks Join Settlement Coin as possible future central bank cryptocurrency

Several of the world’s largest banks have today revealed a series of steps to advance a project aimed at making it easier for central banks to issue currencies on a blockchain.

Called Utility Settlement Coin (USC), the project is designed to help prepare the way for central bank cryptocurrencies by making it easier for global banks to conduct a wide variety of transactions with each other using collateralized assets on a custom-built blockchain.

Work on the next phase of the project — the last before a live implementation — will include six members revealed today, Barclays, CIBC, Credit Suisse, HSBC, MUFG and State Street, building alongside founding financial institutions UBS, BNY Mellon, Deutsche Bank, Santander, NEX and blockchain startup Clearmatics.

Part of the group’s third phase revealed today is the testing of a formal transfer of ownership and an accurate cash equivalents definition for the transfer, in an effort to mimic what a real-time end-to-end transaction between members would look like.

The head of fintech partnerships and strategy at HSBC, Kaushalya Somasundaram, reiterated Jaffrey’s belief that USC could help delineate a path forward for central bank digital currencies, one of the reasons HSBC joined to begin with.

First revealed in 2015 by Swiss banking giant UBS and Clearmatics, the Utility Settlement Coin concept represents the latest in a growing number of blockchain projects that could be amplified by fiat currencies issued on a blockchain.

The newly commenced Phase III is expected to run for about 12 months, at which time phase IV, what Jaffrey called the “go-live phase” will likely begin. The first live collateralized token exchange using the platform could occur as soon as the end of 2018.