Euroclear, a securities settlement house, has reportedly joined a consortium of banking institutions that are developing a payment solution for tokenized assets in the most recent indication of major institutions working with emerging players in crypto-related tech.
Belgium- based Euroclear noted that it had acquired a stake in the 3-year old consortium Fnality as it focuses on moving deeper into distributed ledger technology (DLT) / blockchain sector. This is the transformative technology that underpins crypto-assets such as Bitcoin (BTC) and Ethereum (ETH).
Euroclear, which regularly settles stock and bond trades, the final part of a transfer that is where cash is swapped for legal ownership of an asset, explained that the goal was to settle tokenized assets (also called digital securities), against digital cash via DLT is a quicker and more seamless process.
Fnality, whose founding shareholders include major banking institutions, stated that Euroclear’s involvement will help with growing the consortium’s presence in market infrastructure, the financial system’s essential plumbing, as it starts to transition from testing to officially implementing its plan in 2022.
Fnality CEO Rhomaios Ram said that this has “obvious positive implications for the execution of our business,”
Fnality plans to fully replace some of the inefficient processes and time-consuming paperwork involved in transferring value between financial platforms by leveraging the digital versions of currencies.
The Bank of England had approved (in 2021) a new type of account at the reserve bank to serve the requirements of a range of upcoming payments systems, such as those based on DLT.
Fnality had filed its application with the BoE in order to serve as an operator of this type of account and is expected to go live with its pound sterling payment system later this year.
Euroclear, which settled around 992 trillion euros (appr. $1,095 trillion) worth of securities in 2022, is owned by a group of banking institutions and exchanges, which includes Euronext and the London Stock Exchange Group.
Fnality’s founding shareholders reportedly include 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.