Skip to navigationSkip to content

Banks are developing a crypto token for settling trades—but does anyone need it?

Reuters/Kieran Doherty
A hands-on approach.
  • John Detrixhe
By John Detrixhe

Future of finance reporter

Published This article is more than 2 years old.

For some three years or more, a group of banks has been working on a distributed-ledger system for settlement, researching the feasibility of using blockchain to replace traditional back-office operations. The project is behind schedule—a limited launch was reportedly expected to have taken place in early 2018—but even more financial institutions have joined the effort, which recently raised £50 million ($63 million).

The companies behind the Utility Settlement Coin (USC) appear, based on interviews with several of the bankers last week, as optimistic as ever. They’re planning a private network (rather than a distributed public blockchain like bitcoin), with a yet-to-be-determined number of nodes which will provide processing and ensure fidelity for the ledger. The project will start with five currencies—US dollars, Canadian dollars, euros, British pounds, and Japanese yen—and the plan is to branch out from there.

Despite its hype, distributed ledger technology hasn’t taken Wall Street by storm. An experiment run by the Bundesbank and exchange operator Deutsche Börse found blockchain to be slower and more computationally intensive than other systems. Researchers at the St. Louis Federal Reserve investigated the potential for a so-called “Fedcoin” and found it lacking. “Once we remove the decentralized nature of a cryptocurrency, not much is left of it,” they said.

Enrich your perspective. Embolden your work. Become a Quartz member.

Your membership supports a team of global Quartz journalists reporting on the forces shaping our world. We make sense of accelerating change and help you get ahead of it with business news for the next era, not just the next hour. Subscribe to Quartz today.

Membership includes:

Quartz Japanへの登録をご希望の方はこちらから。