Large-scale blockchain and crypto projects usually do not include banks for obvious reasons. There is one major crypto project however, which is initiated and developed entirely by banks. Yes, some of the world’s largest banks are developing their own digital currency.
14 banks have partnered together with Fnality International for this major crypto project. The goal is to create a digital currency which will drastically lower the cost and speed of cross-border transfers. The group of banks has Japanese, European and American banks which have agreed to issue a utility settlement coin (USC).
In order to complete the project, Fnality International has received over $63 million in capital from the partnering banks. The banks include, Barclays, State Street, MUFG Bank, Credit Suisse, Sumitomo Mitsui Banking Corp and others.
This major crypto project is just the beginning
Financial providers across the world have shown a rapidly growing interest towards digital currencies and blockchain technology. Several banking institutions have begun to use Ripple and xRapid.
Ironically enough, one of the earliest and most outspoken crypto critics of all time, JPMorgan, has begun experimenting with its own digital token – JPMorgan Coin.
Currently, the coin is only tested by a very small percentage of clients for cross-border transactions. Both experts and crypto enthusiasts alike, are understandably not very fond of the JPM Coin.
The major crypto project of Fnality will also aim to be an internal product. Accounts will be set up across the different banks and they will issue USCs as digital equivalents of almost all major currencies. Later, conversion can take place into their paired currencies on a 1-to-1 basis.
There are no plans to develop a decentralized cryptocurrency like bitcoin. The creation of the USC is aimed exclusively at improving banking efficiency. The main issue will be the current outdated cross-border payment system.
The current system requires multiple steps with 3rd-party intermediaries and the foreign exchange markets. This adds fees and slows down the process significantly. The new and improved blockchain-based system, can easily remove the forex side of the trade and allow the orders to be instantly processed.
When launched, the new system will work only with USD, EUR, JPY, GBP and CAD. There will be more currencies added if the project sees large-scale success. The first USC will reportedly be issued in Q3 of 2020.
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