US Banking Community Launches Proof-of-Concept Digital Money Platform
A group of US banks including BNY Mellon, Citi, HSBC, Mastercard, PNC Bank, TD Bank, Trust, US Bank and Wells Fargo announced the launch of a proof-of-concept (PoC) project aimed at developing a digital dollar currency platform called RLN (Regulated Liability Network). According to the announcement, RLN is expected to leverage the prowess of distributed ledger technology.
Reportedly, the regulated liability network (RLN) is expected to run in a test version for the next twelve weeks. As such, regulated US banks will come together to test digital dollars in a tokenized version.
“The 12-week PoC will test a version of the RLN design that operates exclusively in US dollars where commercial banks issue simulated digital money or ‘tokens’ – representing the deposits of their own customers – and settle through simulated central bank reserves on a shared distributed multi-unit ledger,” the announcement says.
The banks will test how well a digital dollar can help reduce friction in payments between banks. In addition, the US banks intend to see how well the RLN will work with existing laws set by various agencies.
US banks rely on blockchain technology amid bearish sentiment
The group of US banks has shocked the cryptocurrency industry by building at a time when the FTX collapse has shaken confidence. In particular, most market strategists predict further capitulation in the crypto market. Also, Bitcoin price broke a significant support level at $19k after Alameda and the FTX saga.
RLN is developed by SETL, Amazon Web Services and Swift. As for the legal team, RNL will be supported by Sullivan & Cromwell LLP while Deloitte will provide advisory services.
After twelve weeks, the RNL results will be analyzed and used for further development in digital money, according to the announcement. Furthermore, the banking group announced that there is no commitment plan to continue with the project after the RNL simulation has been completed.
Banks in the US have invested significantly in the Web3 industry, despite the persistent bear market.
Nonetheless, cash flows into the blockchain and crypto markets are expected to slow in the coming months.
Furthermore, the total trading volume has shrunk significantly in recent months. Whereby the remaining majority of trading volume has been sourced by decentralized exchanges (DEXs).
In particular, the digital dollar being tested by the group of US banks could be confirmation of a possible Fed-backed CBDC around the corner.
