Led by UBS Group, 14 financial firms including banks in the United States, Europe and Japan are using blockchain technology to settle cross-border trades. The group, which spent the last four years developing this project, invested £50 million ($63.2 million) to establish Fnality International, a company to control the bitcoin token, dubbed the utility settlement coin (USC). Trades can take a long time to clear and failed trades are common; the USC token would both carry all the information to complete a trade and be payment for it.

The Wall Street Journal reports that the project’s launch “may herald a new phase in the banking sector’s adoption of blockchain.” “A number of blockchain projects are moving out of the experimental phase and into production, a sign that the technology is becoming more integrated in the global financial infrastructure,” it adds.

The blockchain-based system is intended to make cross-border trades easier and more efficient, as “all the functions performed by intermediaries are baked into the transaction itself.” “You remove settlement risk, the counterparty risk, the market risk,” said UBS head of strategic investment Hyder Jaffrey. “All of those risks add up to costs and inefficiencies in the marketplace.”

According to Fnality chief executive Rhomaios Ram, “the company is working with regulators in several countries to get the necessary approvals,” and he expects the USC token will be “fully operational within 12 months.” In addition to UBS, the backers of the USC token include Barclays, Nasdaq, Credit Suisse Group, Bank of New York Mellon, Canadian Imperial Bank of Commerce, State Street Bank, Banco Santander, Commerzbank, ING Groep, KBC Group, Lloyds Banking Group, Mitsubishi UFG Financial Group and Sumitomo Mitsui Banking.

Other financial institutions that have pursued blockchain solutions include Intercontinental Exchange, whose Bakkt has been held up by regulatory issues; and JPMorgan Chase, which is developing the JPM Coin and “also launched a blockchain-based information-sharing platform called the Interbank Information Network in 2018 that counts more than 250 members.”

Depository Trust & Clearing is slated to debut “a blockchain-based version of its Trade Information Warehouse database for credit-derivatives trading,” and Ripple is building “blockchain-based networks that allows banks to bypass intermediaries.” Startup R3 is developing Corda, a blockchain-based technology that could be adapted for “a number of banking services.”