Using USDC for Instant Settlement in the Ownera FinP2P Protocol
Team CircleMarch 30, 2021
Anthony is the head of business development for Ownera and Co-chair of the GDF Private Markets Digitisation Steering Group. A former Managing Director and Investment Bank CIO, Anthony left the institutional world to focus on the next wave of disruption in financial services — the digitisation of the private markets using digital securities technology. Anthony spent much of his career in the public capital markets leading teams developing electronic trading systems at major institutions including Schroders, Citigroup, HSBC and Societe Generale.
FinP2P is an open-source protocol that interconnects financial securities trading with instant settlement, regardless of which solutions they use. Ownera is unveiling today its FinP2P node implementation, interconnected to 10 ledgers, platforms and custody services.
The safe real-time transfer of the ownership of a digital security cannot be achieved without a guaranteed and simultaneous payment to the seller. This ability to achieve synchronous delivery-versus-payment between the end buyer and seller has eluded the traditional world of finance up until now. International payment networks still rely on the one-way transmission of payment messages between financial intermediaries. However fast these might be, they are still an electronic version of “the cheque is in the post” with the associated risk that you might end up with no assets and no money. In the private markets the problem is even worse, because transactions still rely on money transfers matched manually against spreadsheets.
There is much talk of solving these problems with Central Bank Digital Currencies (CBDCs), but these are likely some years away. So how did the designers of FinP2P solve this problem today? The answer lies in the development of stablecoins and their growing acceptance by regulators and financial institutions. At the forefront of this payments revolution is the internet payments company, Circle.
Circle developed and issues the digital dollar stablecoin USDC. USDC is issued by regulated financial institutions, backed by fully reserved assets and redeemable on a 1:1 basis for US dollars. As of March 8th there were $9.4 billion USDC in circulation with $500 billion in payments processed over the last nine months. Circle and Ownera’s FinP2P infrastructure work reliably together, because they both have something very important in common—they are both digital-first, and based on simple to interconnect APIs and digital security. Following this integration, FinP2P enables instant transactions on any blockchain network or enterprise distributed ledger technology (DLT), with payment done instantly and atomically in USDC via Circle.
When an investor makes a trade on the FinP2P network, the payment is held while the securities are transferred on their origin blockchain, then settled in Circle USDC accounts or on target blockchains including Ethereum, Stellar and Algorand. Circle can also provide services to financial institutions utilizing FinP2P by opening sub-accounts for their clients, and supporting on- and off-ramps from FIAT accounts.
Circle and FinP2P are delivering the rails for a new future of digital finance. Any regulated financial institution that is not already building the trains to run on them should take note.