Group of Banks to Use Blockchain to Settle Cross-Border Trades

A consortium of banks from the U.S., Europe and Japan led by UBS has developed a bitcoin-like token called the Utility Settlement Coin to facilitate cross border trades, according to the Wall Street Journal.  The USC token would function both as a payment device and messenger that carries all the information required to complete a trade, potentially cutting down on a transaction’s time and cost. The Wall Street Journal calls the project one of the biggest developments in the use of blockchain, which is the recordkeeping technology underlying bitcoin.  A UBS executive told the Wall Street Journal that the blockchain-based system, which incorporates all the functions performed by intermediaries, will mitigate risks that add to costs and market inefficiencies, such as settlement risk, counterparty risk and market risk. Other firms including JPMorgan and DTCC are working on tokens to perform other business functions. The UBS-led group, which is called Fnality International, is working with regulators in several countries to obtain approvals.