Settlement Firm Euroclear Joins Blockchain Payment System Funded By Global Banks
In what is being considered to be the latest sign of well-established and conventional companies and institutions partnering with startups and new entrants into the arena of the crypto technology sector, securities settlement house Euroclear announced on Monday that it would be teaming up with a group of banks that are creating a new payment system for tokenized assets.
Euroclear has acquired a small stake in the three-year-old consortium Fnality, said the Belgium-based Euroclear. The consortium Fnality is currently diving deeper into the area of distributed ledger technology (DLT) or blockchain, the technology that forms the basis for crypto assets such as bitcoin.
The aim of Euroclear in joining the consortium was to be able to settle faster and more efficient way all trades in tokenized assets, or digital securities against digital cash on DLT, the company said. The core business activity of the company is to settle stock and bond trades, which is the final phase of a transaction wherein legal ownership of an asset is created with the swapping of cash against the asset as payments.
More than a dozen global banks have jointly set up Fnality and the banks support the entity with finding as well. The joining of Euroclear in the consortium would allow Fnality to expand further the footprint of the entity in market infrastructure, the basic element of financial systems, and help the consortium to accelerate its plan and begin testing of the system and implementing it this year, Fnality said.
“This has obvious positive implications for the execution of our business,” Fnality Chief Executive Rhomaios Ram said in a statement.
Fnality proposes to use digital representations of currencies to replace some of the time-consuming processes and paperwork involved in moving value between financial institutions.
Last year, the Bank of England approved a new type of account at the central bank in order to accommodate a wider range of anticipated payment systems, including those based on blockchain.
Fnality has applied to the Bank of England to become an operator of such an account, and its pound sterling payment system is set to become operational in October.
Euroclear is owned by a group of banks and exchanges, including Euronext and the London Stock Exchange Group, and settled the equivalent of 992 trillion euros ($1,095 trillion) in securities last year.
Banco Santander, BNY Mellon, Barclays, CIBC, Commerzbank, Credit Suisse, ING, KBC Group, Lloyds Banking Group, Mizuho Bank, MUFG Bank, Nasdaq, State Street Corporation, Sumitomo Mitsui Banking Corporation, and UBS are among Fnality’s initial stockholders.