On July 11, 2017, the United States Patent and Trademark Office granted Goldman Sachs a patent for a “Cryptographic currency for securities settlement.” The patent, which was originally filed in October 2014, includes a cryptographic protocol and a supporting virtual wallet “that, in various embodiments, is a security and cash account for storing and managing the cryptographic currency.” According to the document, the virtual multi-asset wallet possesses the ability to generate, manipulate, and store SETLcoins, a new cryptocurrency for exchanging assets, like securities, cash, and cash equivalents, through a peer-to-peer network.
“For example, a virtual wallet can exchange (e.g., via a transaction method described below, such as a two-phase transaction) one or more SETLcoins for, e.g., U.S. dollars and/or other currency at a brokerage account, deposit account, bank account or other financial storage entity. Alternative or additionally, U.S. dollars and/or other currency at a brokerage account, deposit account, bank account or other financial storage entity can be exchanged for one or more SETLcoins in virtual wallet on the peer-to-peer network.”
SETLcoins can house one or more securities. Using the wallet, traders can immediately exchange stocks in companies like IBM and Google for cryptocurrencies by sending transaction messages. Each transaction message includes a transaction and digital signature. And once a message is broadcasted to the network, settlement is immediately processed by a two-phase commitment protocol and/or trusted node “that both traders mutually agree to have act as coordinator (including each other).”
“SETLcoins are exchangeable for, e.g., other SETLcoins and/or other cryptographic currencies (e.g., peercoins). For example, a single IBM-S SETLcoin may be exchangeable for one or more "GOOG" SETLcoins (i.e., Google shares), for 13,000 USD SETLcoins, 100 litecoins, and/or for 5 bitcoins.”
Since the introduction of bitcoin in 2008, the popularity of cryptocurrencies and blockchain technology has increased tremendously in the financial service industry. Due to a sizeable market cap and wide array of sought-after options like Ethereum, Litecoin, NEM, and Ripple, the cryptocurrency market is becoming more attractive as an investment opportunity for financial magnates. This has led banking giants like Goldman Sachs to begin analyzing the market for clients and concentrating investments in technologies, like SETLcoins, that bridge cryptocurrency and blockchain technology with the financial sector.