Mainstream banking heavyweights are joining forces to create a Bitcoin-like stablecoin token for cross-border transactions.
Leading financial institutions in the U.S., Europe, and Japan keep showing immense interest in blockchain and its benefits, The Wall Street Journal reports. Some of the world’s biggest and most respected banks are planning to launch their own stablecoin to improve cross-border settlements and make them faster and cheaper.
Mainstream Banks Want Blockchain, Too
A group of 14 major banks led by the UBS Group has registered a new entity called Fnality International aimed to manage and oversee the development of its new stablecoin dubbed ‘utility settlement coin’ (USC). Together, they have invested over $60 million into the project. Along with UBS, the banking alliance includes big names such as Barclays, Credit Suisse Group, MUFG, BNY Mellon, CIBC, Commerzbank, KBC Group, ING, Lloyds Banking Group, and Banco Santander.
Notably, the Ethereum-based project was founded back in 2015, and since then, it has been reinforced by a number of new backers, including Nasdaq. This confirms that even more traditional financial institutions have decided they could benefit from advanced blockchain technology.
The creation of Fnality International represents a new development stage for the USC token designed as a digital currency for institutional use. The USC token will be backed by bank-owned fiat currency held at central banks.
For a start, there are five currencies under consideration — CAD, EUR, GBP, JPY, and USD. The stablecoin is expected to enable banks to perform more efficient instant cross-border settlements, including stock and derivative trades. USC should increase transactions speeds and reduce settlement, counterparty, and market risks.
Stablecoins Coming to the Banking Industry
Now the focus for Fnality is to develop a seamlessly operational and regulated global ecosystem for the project. In order to provide this universal solution, Fnality is already working with regulators in some countries to get all the necessary regulatory approvals. The company believes the new cross-border platform will be fully operational within 12 months.
It’s worth mentioning that JPMorgan Chase & Co. is working on a similar proprietary stablecoin. It also launched a blockchain-powered Interbank Information Network confirming the pressing need for blockchain-based solutions in the traditional banking.
If the USC project makes much headway, this will be a new chapter in blockchain adoption by the banking industry and the global financial infrastructure.
Do you believe that institutional use of blockchain and stablecoins might give more credibility to the technology and thus promote crypto mass adoption? Let us know your thoughts in the comments below!