U.S.-based financial banking giant Wells Fargo is developing a U.S. dollar-linked rypto-stablecoin that will run on the firm’s first blockchain platform.
Dubbed Wells Fargo Digital Cash, the tokenized dollar will be used in a pilot initially for internal settlement across the company’s business.
The firm said in a press release on Tuesday that the digital token will enable to settle internal cross-border payments across its global network. Its international locations will also be able to move funds between each other using the token.
As banking services become increasingly digital, Wells Fargo sees “a growing demand to further reduce friction regarding traditional borders, and today’s technology puts us in a strong position to do that,” said Lisa Frazier, head of the Innovation Group at the company.
Wells Fargo says its proprietary digital ledger tech (DLT) platform will enable it to move money in “near real-time” and “without impact to the underlying account, transaction postings or reconcilement infrastructure.”
It will also allow the firm’s international locations to move funds outside normal operating hours, remove the need for third-party payment intermediaries and cut the time and costs associated with such transactions.
Wells said its DLT is built on R3’s Corda Enterprise, the paid-for enterprise version of R3’s blockchain technology.
“R3 Corda Enterprise was designed by and for financial institutions. It is a distributed ledger solution that allows for appropriate data confidentiality controls, scales to bank transaction volumes and throughput, and supports an information security design that is compatible with Wells Fargo’s industry regulated standards,” said bank spokesman Roger Cabrera.
Obvious parallels can be drawn between what Wells Fargo is testing out and JPMorgan’s JPM Coin and its Interbank Information Network (IIN) which this week added Deutsche Bank to the 300-plus other banks on that network.
This raises the (at times uncomfortable) question of interoperability since the JPM’s interbank payment system and coin are all built on Quorum, the private version of ethereum the bank has open-sourced. Corda and Quorum do not talk to each other.
When asked about this, Cabrera said:
The pilot, slated for next year, will start with transfers of U.S. dollars, but is expected to expand to other currencies. Eventually, it also aims to reach all Wells Fargo branches worldwide.
“We believe DLT holds promise for a variety of use cases, and we’re energized to take this significant step in applying the technology to banking in a material and scalable way. Wells Fargo Digital Cash has the potential to enable Wells Fargo to remove barriers to real-time financial interactions across multiple accounts in multiple marketplaces around the world.”
Wells Fargo has previously launched other blockchain projects, including a banking prototype and a trade finance platform aimed at the cotton market. It’s also invested in blockchain finance startup Axoni.
Over and above internal settlement, the firm says it plans to use its DLT platform for “multiple” other applications.