The new protocol, modelled on the Regulated Liability Network (RLN) initiative first proposed by Citibank’s Tony McLaughlin, will be developed and operated as a part of that global RLN, and enable banks, central banks, and other regulated institutions to create tokens for their customers. Each token will represent a promise from the issuer to the holder of the token. Transferring tokens between banks will be handled by the network which will mint, burn, and transfer tokens in a co-ordinated single operation to achieve real-time settlement between the customers of any regulated institution.
Digital Asset’s Daml language allows banks and custodians to describe any kind of financial instrument or contractual agreement in a smart contract which then automatically governs interactions between parties during the lifecycle of the arrangement.
The joint initiative will be ready for testing later in 2022 and could start onboarding its first use cases shortly after. In the meantime, SETL and Digital Asset will allow interested institutions to open a partition on its prototype network to test use-cases and to familiarise themselves with the new protocol.
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