The Rise of Tokenised Economy: Unified Ledger, RLN, RSN & More..

The rise of the tokenized economy represents a paradigm shift in how assets are owned, transferred, and exchanged, with profound implications for finance, investment, and the global economy. While challenges remain, the growing adoption of blockchain technology and innovative use cases are driving the evolution of the tokenized economy and reshaping traditional financial markets. In the tokenized economy, traditional assets such as real estate, stocks, commodities, art, and even intellectual property rights can be represented as digital tokens on a blockchain. These tokens are programmable, divisible, and transferable, enabling fractional ownership, liquidity, and easier transferability of assets.

In recent times multiple global initiatives across the globe by BIS, Canton Network,etc:-

Unified Ledger/Finternet

A new model proposed by BIS , Nandan Nilkeni & Agustin Carstens : "Finternet" as a vision for the future financial system: multiple financial ecosystems interconnected with each other – much like the internet. Motivation behind the Finternet is India’s success of DPIs. UPI, Aadhar, ONDC, DigiYatra,,….

·       Tokenisation of money and assets has great potential, but initiatives to date have taken place in silos without access to central bank money and the foundation of trust it provides. A new type of financial market infrastructure - a unified ledger - could capture the full benefits of tokenisation by combining central bank money, tokenised deposits and tokenised assets on a programmable platform.

·       Unified ledger where central bank digital currencies, private tokenised monies and other tokenised assets coexist on the same programmable platform. In simple terms, a unified ledger could be considered a “common venue” where money and other tokenised objects come together to enable seamless integration of transactions and to open the door to entirely new types of economic arrangement.

The concept of unified ledgers does not mean “one ledger to rule them all” – a single ledger that encompasses all financial assets and transactions in an economy. Depending on the needs of each jurisdiction, multiple ledgers could coexist. Application programming interfaces (APIs) could connect these ledgers to each other and other parts of the financial system that exist outside the Finterne

“Tokenization allows us to change the way we do financial transactions” , says Nandan Nilkeni!!

High Level Finternet Architecture

Digital assets transfers on a Unified Ledger

Regulated Liability Network (RLN)

The Regulated Liability Network (RLN) is a contribution to the global debate on the future of money offered by a group of industry participants. It explores the technical, legal and business characteristics necessary to provide on-chain, 24*7 programmable, final settlement in sovereign currencies, consisting of the liabilities of both public and private regulated financial institutions. 

The RLN concept explores the conjunction of shared ledger technology and the sovereign currency system. RLN is a design for digital sovereign currency that is not limited to central bank liabilities.

The RLN scheme may offer potential for a new global settlement infrastructure based on regulated issuers and instruments. Such a network might ensure that tokenized, programmable money is interoperable across different regulated issuers.

• The RLN enables real-time 24x7 transfer and settlement of liabilities.

• The RLN is part of the next generation of multicurrency settlement infrastructure, addressing CPMI/BIS work on cross-border payment.

Particpantts includes Citi, OCBC, Goldman Sachs, , BondeValue, Bank of America, Bank of New York, Payoneer, Paypal, Wells Fargo, SETL and Linklaters.

Regulated Settlement Network (RSN)

Payment processing and settlement firm Mastercard has joined hands with major banking institutions in the United States, such as Citigroup, Visa and JPMorgan, to test distributed ledger technology for banking settlements using tokenization. RSN enables tokenized assets like Treasurys, investment-grade debt instruments and money from commercial banks to be settled collectively.

The RSN PoC envisions an interoperable network for multi-asset transactions that aim to operate on a 24/7, programmable shared ledger.

There are 10 participant banking giants: Citi, JPMorgan, Mastercard, Swift, TD Bank N.A., U.S. Bank, USDF, Wells Fargo, Visa and Zions Bancorp.

Other Global Initiatives to watch for

1. Project Dunbar: Shared platform for international settlements using digital currencies issued by multiple central banks Lead by the BIS, in collaboration with a number of central banks

2. Project Helvetia : Central bank money settlement with more tokenized financial assets over DLT. Multi-phase collaboration between BIS, Swiss National Bank (SNB) and SIX

3.     mBridge :Multi-CBDC platform for international payments. Supported by 22 public sector participants from HK SAR, Mainland China, Thailand and UAE

4.    canton.network : Industry’s First Global Blockchain Network for Institutional Assets. Canton distinctly balances the decentralization of public blockchain with the privacy and controls required for financial markets. No other network allows assets and data to move across applications with real-time synchronization and guaranteed privacy—without the need to sacrifice trust or give up control to central intermediaries. The pilot brings together a wide range of market participants: among the firms are 15 asset managers, 13 banks, four custodians, three exchanges, and the stablecoin issuer Paxos Trust Co. They include abrdn, BNP Paribas, DTCC, DRW, IEX, Nomura, Northern Trust, Standard Chartered, State Street, Visa Inc

5.  SWIFT CBDC : 38 global institutions on the second phase of sandbox testing on our central bank digital currency (CBDC) interlinking solution. This is one of the largest known CBDC experiments to date and we’re excited to share the results of this industry-wide collaboration.

Tokenisation – the process of recording claims on real or financial assets that exist on a traditional ledger on a programmable platform – needs to overcome several economic, legal and technical challenges.

Tokenisation efforts must also address legal issues. Rules and regulations governing tokenised assets must be aligned with those of their non-tokenised counterparts, which requires regulatory coordination to prevent unintended consequences such as shadow activities, theft and regulatory arbitrage. This task is easier for assets subject to legal frameworks and regulations that are standardised and can be easily translated into a computer algorithm. Broader issues include those pertaining to investor and consumer protection, cyber security and regulatory compliance across borders.

#digitalassets #tokenization #cbdc #tokeneconomy #dlt #blockchain #innovation

Reference

https://www.bis.org/publ/arpdf/ar2023e3.pdf

https://www.bis.org/publ/work1178.pdf

https://www.ledgerinsights.com/finternet-unified-ledger-tokenization-push/

https://www.omfif.org/2023/07/regulated-liability-network-shakes-up-payments-world/

https://r3.com/blog/the-regulated-liability-network-on-corda/ 

https://cointelegraph.com/news/mastercard-us-banking-tokenized-settlements

https://www.forbes.com/sites/digital-assets/2024/05/11/visa-mastercard-jpmorgan-and-citi-reveal-game-changing-crypto-plan-for-mass-institutional-adoption-after-bitcoin-ethereum-and-xrp-price-pump/?sh=77a0c877399d

https://www.sifma.org/resources/news/members-of-the-u-s-financial-sector-to-explore-multi-asset-settlement-using-shared-ledger-technology/?utm_source=newsletter&utm_medium=email&utm_campaign=cryptocodex&cdlcid=5e33380926f096d31d28295d

https://www.swift.com/news-events/news/new-collaborative-experiments-explore-more-complex-cbdc-use-cases