Wells Fargo, one of the biggest U.S.-based financial institutions, has revealed its plans to launch an internal cryptocurrency, called Wells Fargo Digital Cash, on its own distributed ledger technology (DLT) platform.
Wells Fargo Digital Cash
The cryptocurrency, dubbed Wells Fargo Digital Cash, is intended to be entirely used as an internal settlement service within the enterprise’s network.
The aim is to facilitate internal transfers of cross-border payments within its global network using digitized cash.
The digital currency is similar to a stablecoin pegged to the U.S. dollar, but a more appropriate description would be a digitized USD.
The proprietary DLT platform that will underpin the network has been built on Corda Enterprise, the enterprise version of R3’s blockchain technology.
Lisa Frazier, head of the Innovation Group at Wells Fargo, stated that there is a growing demand for digitized banking services worldwide and a need to reduce operational inefficiencies in cross-border transactions.
“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,” she said.
Big plans for the future
The new system will also allow the company to move funds outside normal operating hours, remove the need for third-party intermediaries and reduce the time and costs associated with such transactions.
Wells Fargo said that it has already successfully completed a proof-of-concept involving moving value between the U.S. and Canada.
The pilot project, debuting in 2020, is expected to complete USD transfers initially.
It will also add support for multiple currencies and the entire global Wells Fargo branch network in the future.
Furthermore, the company aims to expand on the functionality of its internal DLT platform with plans to build and deploy DLT-based applications.
Nonetheless, the network will not be connected or have any interoperability with any other cryptocurrency platforms currently available or in development.
“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,” Frazier stated.
Tough competition for blockchain-based payments
Wells Fargo is following in the footsteps of banking rival JPMorgan, which launched its JPM Coin on the Quorum blockchain – a private enterprise blockchain solution built on Ethereum – earlier this year.
While Wells Fargo is focusing on facilitating internal transactions, JPM Coin is reaching wider with instantaneous transfer of payments within its Interbank Information Network (IIN), which already counts over 300 partner banks.
Blockchain-based transfer networks promised to remove inefficiencies in the current financial infrastructure and financial giants are slowly entering the space by leveraging their existing networks.
From the other side of the spectrum, the main competitor remains Ripple that built XRP to challenge the legacy system with its own DLT.
However, Ripple would still need to entice financial institutions across the globe to use their network and prove that they can offer superior expertise in the DLT space.
Another global payment network, Mastercard, recently partnered with blockchain firm R3 to develop a blockchain-based cross-border payment solution.
It’s yet unclear whether the market for international payments will be fragmented across different solutions or one platform will capture the majority of the market share, but one thing is certain – blockchain is emerging as the underlying technology for global financial transactions.