Fourteen Transnational Banks Plan to Jointly Issue Cryptocurrency to Help Cross-border Transaction

Since April, Bitcoin has surged from $4,000 to over $8,500, an increase of more than 100%. The driving force behind Bitcoin’s astonishing rise is the entry of giants.

Fourteen financial institutions, including UBS Group AG, plan to issue “bitcoin-like” cryptocurrency to conduct cross-border transactions. These financial institutions are large banks and financial institutions from the United States, Europe and Japan. In addition to UBS, 13 well-known companies such as Barclays, Nasdaq, CreditSuisse and BNY Mellon are ready to join.

A joint venture called Fnality International was set up to manage the forthcoming cryptocurrency. The cryptocurrency is called “utility settlement coin”, or USC for short. The USC remind us of JPMorgan Chase’s cryptocurrency, JPM Coin. Launched in February this year, in addition to being used for cross-border settlement, JPM Coin will also be used in two other scenarios: securities transaction and the replacement of the dollar in the flow of funds for JPMorgan Chase.

When JPMorgan Chase launched JPM Coin, many people still doubted the determination of large financial institutions to lay out blockchain. But after just a few months, it is reported that traditional financial institutions such as Fidelity, TD Ameritrade, ErisX lay out blockchain. Now with 14 financial institutions jointly launching USC, the determination of traditional financial institutions to take over the new blockchain asset market is obvious.

Can the issuance of USC push the encrypted asset market up again? What are its differences campared with BTC, ETH and other encrypted assets? Do ordinary people have the opportunity to invest in USC?

USC can be used as both a payment tool and a “messenger” – carrying all the information needed to reduce the time and cost of the transaction. Dealing with a transaction can involve many aspects, especially cross-border transactions. Cross-border transactions usually take several days or even weeks, and it is common for one party to fail to complete the transaction. Now in cross-border trading systems based on blockchain, functions previously realized by third parties will be integrated into the trading system. Hyder Jaffrey, head of strategic investment of UBS, said that

“Blockchain eliminate all risks that lead to inefficiency and high cost of transaction, including settlement risk, counterparty risk and market risk.”

Besides JPM Coin, JPMorgan Chase has also launched an information sharing platform based on blockchain, the Interbank Information Network (IIN). More than 250 institutional members have joined IIN, including Banco Santander of Spain and Banco Bradsco of Brazil.

U.S. depository trusts and clearing companies plan to launch a platform called AxCore later this year to handle transactions and settlement of credit derivatives data. Ripple, is building block-based networks that allow banks to bypass intermediaries. In addition, startup R3 has been developing blockchain technology called Corda, which can also be applied to a variety of banking services.

The USC will be supported by the bank’s own currency held by the central bank. Rhomaios Ram, CEO of Fnality, said that the company was working with regulators in several countries to get approved. Supervision is a major obstacle for blockchain development. But Rhomaios Ram is confident that USC will be fully put into use within 12 months.

 

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