Royal Bank of Scotland (RBS) has confirmed that it has been leading a consortia of banks to develop an enterprise blockchain standard entitled Cordite, which will allow the banking industry to launch crypto tokens on one network.
Utilising the coding of R3 Corda blockchain technology, the open source CorDApp aims to do what the ERC-20 standard did for Ethereum, ensuring that all tokens adhere to a set of functions, anywhere within the Cordite system.
RBS, one of the world’s 30 largest financial institutions, has been the main contributor and community leader of the Cordite project. Head of emerging technology at RBS, Richard Crook said:
“As we move to the next level of building distributed apps in the enterprise space, there is going to be a need for tokens and units of value on these ledgers.”
Specifically designed to meet the challenges of these highly regulated institutions, Cordite’s distributed ledger technology (DLT) aims to enable banks to easily create a variety of functional digital assets (tokens), that will streamline various banking products and services.
Explaining the potential for Cordite, Crook believes that the token will provide a way of distributing fees among participants within enterprise blockchains. Describing how the tokens could be used within banks commercially, he said:
“if I am building an invoice platform for trade finance, when the invoice goes one way, I need a digital asset that you and I agree is worth something coming back.”
The RBS Banker went on to suggest how the equity and debt trading desks of banks, could start to look at the issuance of debt or equity in the form of digital assets. Highlighting the possibility for capital raising within a bank, he said:
Finally, Crook stated that RBS and NatWest are interested in exploring the development of what he conceived as ‘digital mutuals’, member-owned entities such as building societies in the U.K. and savings and loans in the U.S., could utilise the Cordite tokens, he said:
“membership, proposals and voting and can create mutual societies, to use the legal term, on the blockchain.”
Digital mutuals could eradicate the need for annual shareholder meetings, however, a new form of legal structure may be required. To this end Crook hinted at the U.K. Financial Conduct Authority, saying:
“The FCA may also be interested in the concept of digital mutuals. But that’s another story.”
Crook and his team at RBS began working on Cordite around 6 months ago, prior to this they collaborated with U.K. Financial Conduct Authority to develop a Corda-based mortgage reporting app, launched in September last year.
Major banks have already successfully experimented with streamlining securities transfers using Corda, whilst large firms are testing internal tokens to move money across their global treasuries, eliminating currency conversions.
Richard Gendal Brown, R3’s CTO stated that Cordite is just one of many “CorDapps” about to be released, he said:
“Cordite is not something that R3 invented, it’s something that the community itself saw a need for and went to build,” adding “Corda is developing as a genuine platform.”
Cordite is about to come out of stealth mode, however a date for launch has not been announced.