Major Banks Join USC Project for Blockchain-based Cryptocurrency Banking

Several major banks have joined a project called Utility Settlement Coin (USC) that is intended to facilitate the issuance by central banks around the world of currencies using Blockchain technology.

The USC platform will also make it easier for international banks to settle various transactions with each other, through the use of collateralized assets on a custom-built Blockchain. The new member banks as of late August 2017 are Barclays, Credit Suisse, HSBC, State Street, MUFG, and CIBC.

The USC platform is already undergoing its final test before its live implementation. The new member banks are participating in the project’s final test.

According to project co-founder and UBS Head of Strategic Investment and Fintech, Hyder Jaffrey, the project will serve as a stepping stone to a future in which central banks around the world are already utilizing their own virtual currencies.

"It may well inform the way central banks choose to move things forward. We see it as a stepping stone to a future where central banks issue their own [cryptocurrency] at some point."

Brief USC background and latest developments

The USC project was launched by the financial institutions UBS, BNY Mellon, NEX, Santander, and Deutsche Bank, along with Blockchain startup Clearmatics in 2015. The platform aims to use virtual currencies that could be amplified by fiat currencies issued on the Blockchain.

The collateralized digital tokens will be directly forwarded to the owner of the asset, rather than going through the traditional network of clearinghouses.

According to Jaffrey, the USC will underpin such things as settlement finality, transfer of ownership, and a cash equivalent definition.

Jaffrey’s comments were supported by HSBC’s Head of Fintech Partnerships and Strategy, Kaushalya Somasundaram, who claimed that the USC could help in delineating a path forward for central bank cryptocurrencies.

"The settlement coin will be a collateralized digital currency, backed by cash assets at a central bank, which allows us to transfer ownership easily through the exchange of USCs, thus reducing process complexity and the time taken for settlement."