HomeNewsCryptocurrency-enriched data: ISO 20022 compliance elevates XRP, Cardano and IOTA in tokenization...

Cryptocurrency-enriched data: ISO 20022 compliance elevates XRP, Cardano and IOTA in tokenization efforts

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  • Global authorities, such as the BIS and MAS, explore digital infrastructures to facilitate seamless cross-border transactions.
  • A shared ledger provides real-time visibility of balances, optimizing transaction settlement.

The introduction of a universal shared ledger for payments and digital assets is capturing interest as a method to transform the way transactions are recorded and settled. This interest is fueled by the vision of global financial institutions and the adoption of digital infrastructures to facilitate borderless transactions.

Global Exploration of Shared Ledgers

Over the past two years, the potential to shift to a shared ledger paradigm has been the subject of discussion in numerous specialized publications. The BIS, in its Annual Economic Report 2023, outlined its vision for a future monetary system, envisioning a financial market infrastructure that could fully leverage the benefits of tokenization.

Simultaneously, financial authorities and international bodies have launched initiatives to examine how an open, digital ledger could simplify transactions between countries. Among these initiatives are the Monetary Authority of Singapore’s (MAS) Global Layer One (GL1) project and the International Monetary Fund’s (IMF) X-C platform, which seek to establish new avenues for global financial interoperability.

The Promise of a Shared Ledger

A shared general ledger suggests a fundamental change in the maintenance of financial systems and transaction records. Instead of maintaining separate records and using messages to reconcile and execute transactions, a shared ledger would provide a common, real-time view of balances for all participants.

Advantages of the Shared Ledger Model

Adopting shared ledger technology and tokenization could theoretically lower risk and costs in the marketplace, offering instantaneous transactions and atomic native settlement for Delivery versus Payment (DvP) and Payment versus Payment (PvP) transactions, while minimizing the need for reconciliation between financial institutions.

Enhanced with a Messaging Layer

In addition to a shared ledger, a robust messaging layer is essential to facilitate the exchange of structured data needed for regulated transactions. Blockchain technology is effective for recording funds movements, but for seamless transactions, additional data needs to be transferred for value-added services such as AML compliance, sanctions screening and trade reconciliation.

Defining the Future of Tokenization

The future of tokenization could manifest itself through an abrupt shift to a shared ledger model or through a more gradual transition that allows multiple shared ledgers to coexist with traditional systems.

Currently, the idea of implementing shared ledgers is theoretical, and collaborative innovation will be crucial to its practical realization. It is critical that shared ledger implementations work together with established financial messaging providers to determine how these complementary approaches can best work together.

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Isai Alexei
Isai Alexei
As a content creator, Isai Alexei holds a degree in Marketing, providing a solid foundation for the exploration of technology and finance. Isai's journey into the crypto space began during academic years, where the transformative potential of blockchain technology was initially grasped. Intrigued, Isai delved deeper, ultimately making the inaugural cryptocurrency investment in Bitcoin. Witnessing the evolution of the crypto landscape has been both exciting and educational. Ethereum, with its smart contract capabilities, stands out as Isai's favorite, reflecting a genuine enthusiasm for cutting-edge web3 technologies. Business Email: [email protected] Phone: +49 160 92211628