Some of the world’s top 14 banks in the USA, Japan, and Europe have recently invested a whopping amount of $63.1 million into a project run by Fnality International to build a Utility Settlement Coin (USC).
These banks, which includes various popular names like Barclays recently gained limelight for raising $55M for a blockchain-based invoice exchange system Crowdz, have made this decision in hope to cut down the third-party intermediaries and make the cross-border payment process smooth and cost-effective. And it seems that USC will go with their expectations.
Currently, when it comes to cross-border payments, the process is quite complex and tiresome. It goes through multiple steps involving foreign exchange market when dealing with different currencies, adding fees of third-parties, and more.
While there are various other organizations putting their best efforts into integrating Blockchain and Cryptocurrencies in Banking sector like JPMorgan introduced its coin – the JPMorgan Coin and Ripple planned to get into partnership with various reputed banks to make its XRP currency as an alternative payment mode – something that placed it in the list of cryptocurrency trends that would rule 2019 and beyond -, USC is expected to bring drastic changes in the domain.
It is hoped to make the transaction process will be more streamlined, faster, and independent of the need to buy the destination currency.
The process will begin with Fnality setting up accounts for central banks and issuing them some USCs. These USCs, considered as a digital equivalent of major currencies, will be interchangeable with the real currencies in a one-to-one fashion.
So, when a user transfers money from, let’s say Japan to the USA, the Japanese bank will transfer the amount in yen to the central bank of the country. Fnality will then issue the same amount of USCs and deposit them into the American bank. The bank will send the equivalent proportion of dollars to the end client’s personal account.
In this way, the USCs – backed by the central banks – will help to mitigate the risk of price variation and thus, serve us with a stable way for interbank transfers.
And the best part, these USCs, unlike cryptocurrencies, won’t suffer from the risk of value fluctuations which will again make the cross-border transactions faster and effective. They will rely on Blockchain as a record-keeping software to prevent data frauds but will be completely associated with offering solutions supported by the Central banks and financial organizations that make the process more efficient.
With such a working process, the first Utility Settlement Coin is expected to hit the market by late 2020 – initially operating with U.S. Dollars, pounds, euros, Canadian dollars, and yen.
Let’s hope we come across many more of such announcements as Blockchain and Cryptocurrency Trends for 2019 and Beyond. And eventually, experience far streamlined banking experience.