Two digital settlement operators have teamed up to develop a protocol designed to bring interoperability to the tokenisation market.
The initiative launched by UK-based SETL and US-based Digital Assets will enable regulated institutions, including banks, asset managers and central banks, to create tokens that can be minted, exchanged and settled in real-time.
It is based on the regulated liability network (RLN) proposed by Citibank’s Tony McLaughlin, managing director of transaction banking, combining Digital Asset’s daml protocol for smart contracts with SETL’s RLN network.
The joint initiative will be ready for testing later this year with the first clients expected to be onboarded shortly after.
According to SETL chief executive Philippe Morel, there is a “real momentum behind the RLN model” from market participants.
“This approach will be easy for organisations to embrace and will provide an equally simple model for CBDC, bank and e-money coins, as well as any kind of tokenised liability such as bonds, loans and shares,” he said.
There is also more backing from central banks and other supervisory bodies for tokenisation. In recent weeks the New York Federal Reserve suggested that tokenising regulated deposits may be a better way forward than focusing on the less regulated stable coin market.