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An Exploration Into
Distributed Ledger Technology
Josiah Hernandez
October 7, 2020
Satoshi Capital Advisors
New York, New York
jh@satoshi.capital
An Exploration Into DLT
Working Paper
Page 1
An Exploration Into
Distributed Ledger
Technology (DLT)
Preface
Satoshi Capital Advisors is a global advisory firm with headquarters in New York and Kaduna. SCA works
with central banks, governments, and industry leading corporations to build, implement, and operate
financial technology, digital transformation, growth, and capital advisory initiatives. Most succinctly, we
work with industry and world leaders to build the future. Our team has been building digital currency
markets since 2013 and brings many decades in experience, expertise, and relationships in financial
technology, digital transformation, quantitative finance, management consulting, capital advisory, and
government relations.
I would like to thank the Nigeria FSS 2020 Committee Members for their interesting responses to my
work, which guided my writing in good directions and led to the many paper addendums.
With pleasure, I would also like to a give a shout out to Ashleigh Jackson for her insights and
instructional feedback on how to move forward.
An Exploration Into DLT
Working Paper
Page 2
Contents
Preface .......................................................................................................................................................... 1
Working Paper .............................................................................................................................................. 4
Introduction ..................................................................................................................................... 4
Section 1 - Use Case Information ..................................................................................................... 4
Section 1.1 - Central Bank Digital Currency ........................................................................ 4
Section 1.2 - Digital Trade Finance ..................................................................................... 6
Section 1.3 - Securities Digitization..................................................................................... 8
Section 1.4 - Real Estate Tokenization ................................................................................ 9
Section 2 – Concept Proof Framework .......................................................................................... 10
Addendum 1 ............................................................................................................................................... 22
Introduction ................................................................................................................................... 22
Section 1 – Consideration points ................................................................................................... 22
Section 1.1 – Smart Contracts ........................................................................................... 22
Section 1.2 – Trade Digitization ........................................................................................ 22
Section 2 – High Level Use Cases, Case Studies ............................................................................. 23
Section 2.1 – Digital Trade ................................................................................................ 23
Section 2.2 – Securities Digitization .................................................................................. 24
Section 2.3 – Real Estate Tokenization ............................................................................. 24
Section 2.4 – Central Bank Digital Currency ..................................................................... 25
Section 3 – Specific Use Cases, Per Sub-Sector .............................................................................. 26
Section 3.1 – Agriculture ................................................................................................... 27
Section 3.2 – Real Estate ................................................................................................... 27
Section 3.3 – Banking and Financial Services .................................................................... 27
An Exploration Into DLT
Working Paper
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Addendum 2 ............................................................................................................................................... 29
Introduction ................................................................................................................................... 29
Section 1 - Use Case Implementation Details ................................................................................ 29
Section 1.1 - Trade & Agriculture ...................................................................................... 29
Section 1.2 - Capital Markets ............................................................................................ 30
Section 1.3 - Real Estate ................................................................................................... 31
Section 1.4 - Remittances ................................................................................................. 32
Addendum 3 ............................................................................................................................................... 34
Introduction ................................................................................................................................... 34
Section 1 - Government Revenue Generation & Collection .......................................................... 34
Section 2 - CBDC Concept Proof..................................................................................................... 35
Addendum 4 ............................................................................................................................................... 36
Introduction ................................................................................................................................... 36
Section 1 - Selection Criteria Table ................................................................................................ 36
Section 2 - Selection Process ......................................................................................................... 37
Addendum 5 ............................................................................................................................................... 38
Introduction ................................................................................................................................... 38
Section 1 - Selection Criteria Table ................................................................................................ 38
Section 2 - Selection Process ......................................................................................................... 39
Addendum 6 ............................................................................................................................................... 40
Introduction ................................................................................................................................... 40
Section 1 – DLT Data Integrity........................................................................................................ 40
Section 2 – Financial Inclusion ....................................................................................................... 40
An Exploration Into DLT
Working Paper
Page 4
Working Paper
Introduction
The global economy’s rapid digitization has made evident the many issues and opportunities
that exist with financial system modernization. A key driving technology for this modernization
has been distributed ledger technology (DLT).
This paper will outline how central banks and governments around the world can implement
minimum viable products with regards to value adding initiatives built for wide reaching financial
and capital market systems utilization with distributed ledger technology. The first section in the
paper will be introductory in nature and provide information on the different use cases available
and compelling with regards to a focus on the financial sector. The second section in the paper
will provide additional details and frameworks for implementing the most scalable and widely
relevant use cases. There will be an emphasis on emerging market economies throughout the
paper.
Section 1 - Use Case Information
Section 1 will introduce primary high-level use cases with a focus on distributed ledger
technology applications within the financial services sector. These use cases include central
bank digital currency, digital trade finance, securities digitization, and real estate tokenization.
Section 1.1 - Central Bank Digital Currency
This section will focus on central bank digital currency (CBDC) and its history, design, globality,
and applicability with regards to DLT and emerging markets.
Section 1.1.1 - History
CBDC has technically existed since the central banking digital transformation began in the
1980s, and central banks began to move from paper ledgers to digital ledgers. DLT
popularization due to a bitcoin surge to prominence in the 2010s has brought about a
resurgence and prioritization in the concept for central banks across the globe. At its core,
CBDC entails a native digital issuance and payment mechanism for central bank money supply
(i.e. base money supply). Through a traditional economics lens, this can be extended to M1
money supply and beyond through private sector collaboration intended to reach retail market
An Exploration Into DLT
Working Paper
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participants or a direct to retail market participant offering from a central bank, which would
effectively extend base money supply to encompass M1 money supply. The first central bank to
propose utilizing a DLT solution for this possibility was the England Central Bank in 2015, and
was followed up by the Canada Central Bank in 2016 introducing the concept for a CBDC
backed by a bitcoin standard comparable to the gold standard in the 19 and 20 centuries.
Section 1.1.2 - Design
Structural designs for CBDC vary widely according to target market, with the two primary focus
types including wholesale utilization and retail utilization. A wholesale utilization focus design
only includes institutions that maintain accounts at the issuing central bank, albeit extending the
qualified institutions pool significantly due to lower overhead costs in account opening and
management by the respective central bank that corresponds with well executed system
digitization. These designs usually keep money issuance power exclusive to the respective
central bank and enable institutions with CBDC accounts at the respective central bank to
instantly settle transactions between each other at no cost with 24/7/365 business hours. They
also enable automating many central bank functions, including lending facilities and relief funds
distribution. A retail utilization focus design includes all consumers in the economy that the
issuing central bank is responsible for that can be expected to utilize a central bank backed
digital payment solution, and enables them to instantly settle transactions between each other
at no cost with 24/7/365 business hours. This can include over a billion people in markets like
China and India.
Digital currency issued by a private sector entity with reserves custodied at a central bank is
known as synthetic central bank digital currency. This enables the solvency risk-free benefit that
CBDC offers while introducing corporate agility and retail market operating expertise that the
private sector far outpaces the public sector on.
Section 1.1.3 - Globality
CBDC has become a forefront focus for most major central banks around the globe. The core
goal for these central banks tends to be developing a reliable and modernized payment system
that enables instant transaction finality, to which CBDC is often seen as a solution provider for.
Central Banks currently exploring CBDC through pilot programs, working groups, and research
work include the European Central Bank, Chinese Central Bank, Hong Kong Monetary
Authority, Federal Reserve, Ghana Central Bank, South African Reserve Bank, Canada Central
Bank, England Central Bank, and many others. Satoshi Capital Advisors is also building an
An Exploration Into DLT
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initiative to pilot a global multi-currency CBDC system and welcomes participation from central
banks around the world.
Section 1.1.4 - Applicability
The primary applications for CBDC that bring most utility to global financial and capital market
systems are solutions that well service unbanked and underbanked populations, digital natives,
and cross-border businesses. Wholesale or retail CBDC that indirectly or directly significantly
lowers overhead costs to open and manage accounts for low and variable income populations
and subsequently enables them access to low cost financial services addresses the challenge
in banking the unbanked and underbanked, which number in the billions across the globe
12
, that
corresponds with traditional financial system infrastructure. Servicing this population segment
could be a requirement for institutional participation in a CBDC, furthering progress towards
comprehensive financial inclusion. Digital natives, which largely encompass younger
generations, are naturally gravitated to digital payment systems due to relative convenience and
comfortability. Cross border businesses benefit greatly from a wholesale CBDC in a multi-
national union like the European Union or the African Union where there is or will be widespread
single currency distribution and ample cross border trade. Utilizing a CBDC significantly lowers
costs and payment process friction that corresponds with traditional financial system
infrastructure, albeit less so in a developed market like the European Union where payment
systems like SEPA work with swiftness and limited to no transaction fees.
Section 1.2 - Digital Trade Finance
This section will focus on digital trade finance (DTF) and its history, design, globality, and
applicability with regards to DLT and emerging markets.
Section 1.2.1 - History
Since the ancient Mali and Roman empires ruled the world there have been institutions focused
on enabling inter- and intra-national trade through lending, trust, and process optimization
solutions. Due to the complexity and multilateralism inherent to the trade industry, this has
proved to be a consistently difficult and significant overhead business. The 2000s saw much
1
https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter2.
pdf
2
https://globalfindex.worldbank.org/sites/globalfindex/files/chapters/2017%20Findex%20full%20report_chapter3.
pdf
An Exploration Into DLT
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work to digitize these solutions, although most lacked globality, interoperability, and
standardization. With distributed ledger technology proliferation due to bitcoin’s rise to
prominence in the 2010s there grew a movement among major trade finance institutions to
create global, standardized, and interoperable solutions utilizing DLT.
Section 1.2.2 - Design
Structural designs for digital trade finance solutions built with distributed ledger technology often
replicate the same core concepts and only significantly differ in technological approaches.
Trade finance solutions built utilizing distributed ledger technology incorporate consortiums to
bring together multiple public sector and private sector institutions that frequently interact with
each other principally and on their clients behalf to create widely distributed digital systems that
comprehensively service market demand. The core concepts these solutions focus on include
multilateral communication, cargo provenance, payment facilitation, and paperwork automation,
all which DLT services well with regards to streamlining.
Section 1.2.3 - Globality
The consortium design most often utilized in digital trade finance solutions focus on large
importers and exporters and their respective servicing institutions, which typically account for
numerous countries and localities therein. From Rotterdam in Amsterdam, the largest shipping
port in the Western hemisphere, to Shanghai in China, the largest shipping port in the world,
global infrastructure providers and market participants are piloting distributed ledger technology
solutions, taking aim at archaic trade finance infrastructure and corresponding arduous
processes with a goal to achieve effective digital transformation. In addition, these consortiums
often include large financial institutions that individually cover many different geographic
markets in the trade finance industry.
Section 1.2.4 - Applicability
The primary applications for DLT based digital trade finance are solutions that well service the
agriculture, mining, and travel trade industry segments. With these segments comprising
material market share with regards to global economic output, there are significant economic
boosts to be applied through effective digital transformation therein, utilizing DLT powered
digital trade finance. A focus on importers and exporters also enables more effective and active
cross-border global trade. In addition, further unionization across geographic regions and
continents with regards to removing trade barriers opens the door for digital trade finance
solutions with ample product-market fit to gain strong multinational traction.
An Exploration Into DLT
Working Paper
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Section 1.3 - Securities Digitization
This section will focus on securities digitization (SD) and its history, design, globality, and
applicability with regards to DLT and emerging markets.
Section 1.3.1 - History
The bond market dates back to the 12 century and equities to the 17 century, yet outside
financial engineering and derivatives creation there has not been much fundamental innovation
since. One such innovation was securities trading electronification, which began in the 1960s
and brought pre-trade and trade execution processes into the digital realm, leading to decades-
long improvements to bring transaction execution speeds down to well under 1 second.
However, post-trade settlement and broader financial firm back office processes have largely
remained in limbo, beholden to outdated and largely analog industry standards and workflows.
Bitcoin’s rise to prominence in the 2010s generated strong interest from financial firms, from the
world’s largest custody banks to the world’s most active hedge funds, to utilize distributed
ledger technology to improve the industry’s standards and workflows through DLT powered
digital transformation and ultimately bring about global market interconnectivity in a way that
was previously not possible.
Section 1.3.2 - Design
Securities digitization systems built with distributed ledger technology focus on digitizing the
entire securities’ lifecycle by carrying out each step on a shared distributed ledger, from
issuance to secondary market post-trade settlement to final maturity. Comprehensive systems
have yet to be launched for public utilization although some piecemeal solutions have been
launched to meet demand for security token offerings, which are a DLT powered reinvention for
the initial public offering. Lack in globality and comprehensiveness with regards to digitizing the
securities’ lifecycle have prevented these systems from reaching significance relative to
traditional securities and materially competing for market share globally. While regulatory
complexity can also be challenging when building these systems, their digital and
programmable nature enable solutions to be built that can automate and abstract away most
regulatory functionality. The ultimate goal for these systems is to build globally interoperable
financial market infrastructures that benefit from lower transaction costs, improved settlement
times, greater liquidity, and overall more market activity.
An Exploration Into DLT
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Section 1.3.3 - Globality
Global market activity in the DLT powered securities digitization space has thus far been fairly
limited to closed systems built for interbank market activity among the world’s largest financial
institutions. Piecemeal solutions in the USA, EU, and Japan have begun gaining traction,
although lack the retail and institutional demand required to materially compete with traditional
securities markets. With the private sector looking to optimize the securities’ lifecycle, and
particularly the public listing process, through DLT powered digitization and the public sector
looking to reduce systemic risks and improve market surveillance and compliance mechanisms
through DLT powered digitization, there will no doubt be significant progress made at the global
level over the next few years with regards to these systems maturation and adoption.
Section 1.3.4 - Applicability
Emerging markets have historically suffered from ineffective and inefficient capital markets,
stymying potential corporate growth and public sector budget financing from foreign and
national investment. Comprehensive DLT powered securities digitization with wide distribution
across the continent would bolster capital raising efforts from the startup level up to the national
and multinational government levels by addressing these problems in addition to aggregating
liquidity and market demand, thus also creating greater incentive for financial institutions across
the globe to participate in emerging market capital markets.
Section 1.4 - Real Estate Tokenization
This section will focus on real estate tokenization (RET) and its history, design, globality, and
applicability with regards to DLT and emerging markets.
Section 1.4.1 - History
Real estate tokenization is a fairly novel concept without much established history before the
distributed ledger technology and bitcoin’s popularization in the 2010s. The only major digital
assets representing physical real estate that existed previously are special purpose funds, like
real estate investment trusts (REITS), built to gain mass market liquidity on often large and
relatively illiquid real estate portfolios. Digital is also a loosely utilized term in this context when
considering the only components for these offerings that are natively digital are pre-trade
market data and trade execution. REITs were first launched in the 1970s and have since grown
to hold a combined global market capitalization exceeding $1 trillion.
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Section 1.4.2 - Design
Tokenized real estate offerings represent holistic or fractional ownership in a single property or
real estate portfolio through a DLT powered digital asset. It is worth noting that tokenization
enables divisibility in real estate ownership in ways that were previously not possible due to
logistical, administrative, and regulatory challenges that become addressable with DLT powered
digital transformation. Structural designs for tokenized real estate largely overlap with those for
securities digitization.
Section 1.4.3 - Globality
Due to regulatory authorities largely applying securities regulations to tokenized real estate
offerings, there has been limited cross-border activity in this DLT market segment. Most
tokenized real estate offerings thus far have targeted investors in the USA, EU, and Japan and
often only list their digital real estate tokens in marketplaces operating in the country where the
real estate is located. However, there are growing efforts to globalize these marketplaces which
would enable a more international approach to investor targeting in addition to real estate
portfolio construction.
Section 1.4.4 - Applicability
Emerging markets are rich with fertile farmland (3x more than the global average
3
) and growing
cities
4
, approaching and sometimes leading the developing world in both arenas. Despite this,
emerging markets have relatively limited global investor interest with regards to real estate.
Effectively constructed DLT powered tokenized real estate offerings that streamline the
assignment and transfer process and corresponding regulatory filings significantly increase the
investability for emerging market real estate and ultimately open the door for trillions in foreign
investment dollars to enter emerging markets.
Section 2 – Concept Proof Framework
Please see below for the implementation and operating framework with regards to a wholesale
CBDC concept proof.
3
https://www.nationmaster.com/country-info/groups/Emerging-markets/Agriculture
4
https://www.mckinsey.com/featured-insights/urbanization/unlocking-the-potential-of-emerging-market-cities#
SATOSHI CAPITAL ADVISORS 1
Satoshi Capital Advisors
Network Roles
Central Reserve Institution is an entity organized within the issuing Central Bank tasked with
managing CBDC issuance and redemption. This entity also operates a liquidity facility enabling
its members to issue and redeem CBDC against traditional currency in a primary market. The
CRI performs AML/CFT checks before onboarding PSPs onto the network.
Payment Service Provider (PSP) is an entity regulated by the issuing Central Bank that
maintains an account at the Central Bank enabling them to deposit funds. Payment service
providers are consumer facing, while the Central Reserve Institution only works with regulated
Payment Service Providers. These are the only institutions with write access to the CBDC
Ledger.
Node Operator (NO) is a trusted entity (e.g. large PSP) that runs a node on the network and
provides direct Ledger access to PSPs not running their own nodes.
Satoshi Capital Advisors
Transaction Flow:
Issuance & Redemption
Payment Service Providers can easily initiate CBDC issuance and redemption transactions once their
account at the Central Reserve Institution has been created.
Issuance transactions are initiated by wiring fiat into a default account kept by the respective PSP at the
Central Bank. The Central Reserve Institution detects the incoming deposit and initiates an AML/CTF
process that if successful, credits the PSPs on-Ledger account. (Alternatively, the PSP could initiate the
request via API and be given wiring instructions).
Redemption transactions are initiated through an API call into the network through their node. The
request is subject to AML/CTF checks and if approved, the CBDC is redeemed from the PSP’s on-Ledger
account and its Central Bank fiat account is credited for the amount.
Satoshi Capital Advisors
Workflow – CBDC Issuance
PSP Initiates Deposit Central Bank Software Performs CRI Credits PSPs
Acknowledges Fiat AML/CTF Analysis On-Ledger Account
Options: Receipt
• PSP deposits fiat into a If AML/CTF check fail,
central bank account that deposited fiat funds are
automatically triggers the frozen until transaction is
on-Ledger deposit further reviewed
• PSP requests deposit and
is given wire information to
send fiat
INITIATE
ACKNOWLEDGE
AML / CTF
CREDIT
Satoshi Capital Advisors
Workflow – CBDC Redemption
PSP Initiates
Redemption on-Ledger
Central Reserve
Institution Receives
CDBC On-Ledger
Software Performs
AML/CTF Analysis
If AML/CTF checks fail,
deposited CDBC funds are
frozen until transaction is
further reviewed
Central Bank
Credits PSPs Off-Ledger
Bank Account
INITIATE
ACKNOWLEDGE
AML / CTF
CREDIT
Satoshi Capital Advisors
Transaction Flow:
CBDC Transfers between PSPs
Payment Service Providers can send and receive CBDC payments by accessing the CBDC Ledger directly
through their node using their network identity cryptographic keys. The requests are sent through API
calls within a common interface or the PSPs own user interface.
Network Operators provide Ledger access to PSPs not running their own node on the network
(e.g. other financial institutions not running nodes) and may be a PSP themselves. The Node Operator
custodies the on-Ledger identities (i.e. cryptographic keys) for the PSPs on its node and uses the keys to
sign transactions on their behalf, therefore it must be a trusted entity.
At the retail level, PSPs would receive fiat from the general public, which can then be aggregated to
initiate a larger CBDC issuance into the PSPs on-Ledger account.
Satoshi Capital Advisors
Workflow – CBDC Transfer between PSPs
Source PSP Initiates Target PSP Receives Market Surveillance and Compliance
Transfer On-Ledger CBDC On-Ledger Software Continuously
Reviews Activity for
As an alternative, the target Suspicious Behavior
PSP is required to confirm
before receiving the CBDC
INITIATE
RECEIPT
SURVEILL
Satoshi Capital Advisors
Funds Flow:
CBDC Interest Payments
CBDC holders receive interest payments proportional to their average CBDC holding time, i.e. their
average percentage ownership in issued CBDC for a given period.
Interest payments are distributed by increasing CBDC account balances proportional to their holdings (i.e.
crediting all digital wallets balances) on a fixed schedule (e.g. per hour, per day).
The Central Reserve Institution invests deposited fiat reserves into local investment grade bonds,
generating a return on capital that is passed along to CBDC holders in real-time account balance
increases.
A meaningful reserve funds percentage are held in fixed income investments, with the remaining held as
cash to fund CBDC redemptions. Capital allocation is rebalanced according to net changes on a monthly
basis.
Satoshi Capital Advisors
Funds Flow:
CBDC Interest Payments
The Central Reserve Institution may want to pay an interest on Payment Service Providers CBDC holdings
on a desired frequency (e.g. per hour, per day, per week). There are many options and all are supported by
the architecture proposed:
◦ Pay an interest (potentially equal to the overnight lending rate) by issuing additional CBDC in the
system. These payments would be funded by fiat deposits from the issuing Central Bank into the CRI
to issue the necessary CBDC.*
◦ Pay an interest based on a diversified investments basket held in escrow by the CRI or issuing Central
Bank. The investments (e.g. government bonds, gold, bitcoin) would be funded by the CRIs fiat
reserves backing the CBDC.
* The issuing Central Bank may fund using its reserves or may issue new central bank fiat. Alternatively, it could issue new money supply directly onto the
CRI’s account, however, we would recommend leaving this option for a later stage.
Satoshi Capital Advisors
Workflow – CBDC Interest Payments
PSP’s average CBDC
holdings are calculated
based on transaction
history
CRI receives funding from
the issuing Central Bank*
Funding is based either on a
pre-established rate or on
investments held by the
issuing Central Bank funded
by the CRI reserves
CRI issues CBDC onto its own
Ledger account
This self-issuance process
follows a similar workflow as
when issuing CBDC to a PSP
CRI Distributes New CBDC
To Ledger Accounts With
A Balance
CALCULATE
FUND
ISSUE
DISBURSE
* The issuing Central Bank may fund using its reserves or may issue new central bank fiat. Alternatively, it could issue new money supply directly onto the
CRI’s account, however, we would recommend leaving this option for a later stage.
Satoshi Capital Advisors
Fees
The Central Reserve Institution will initially charge a fixed percentage fee for issuance and
redemption transactions.
There will be no protocol-level transaction fees to send and receive CBDC payments to
promote system adoption.
An Exploration Into DLT
Working Paper
Addendum 1
Page 22
Addendum 1
Introduction
This addendum to the An Exploration Into DLT working paper will outline additional
consideration points with regards to the aforementioned material and provide case studies for
the high level use cases explored in the working document.
Section 1 – Consideration points
Because distributed ledger technologies are tamper-resistant by design (see addendum 6,
section 1 for more information), they tend to improve processes around asset provenance,
trading, and transfer. Each ownership transfer (as well as liens and other events) can go into the
respective distributed ledger, resulting in a trustworthy information source with regards to asset
lineage.
Section 1.1 – Smart Contracts
A distinct advantage with distributed ledger technology, and digital transformation in general, is
the ability to automate activities that previously added cost, complexity, and delays to
transactions. This is accomplished through smart contracts, which are autonomous software
programs that can perform complex actions to trigger or respond to events on a distributed
ledger.
Section 1.2 – Trade Digitization
Trade digitization through distributed ledger technology has particular relevance with regards to
the economic unionization, like the African Continental Free Trade Agreement (AfCFTA). DLT
may facilitate and enhance implementation for the following:
• National foreign currency real time gross settlement system (RTGS)
• Cross border foreign currency RTGS
• Interbank integrated clearing system for international bank asset transfers
• National local currency RTGS
An Exploration Into DLT
Working Paper
Addendum 1
Page 23
Note that much this can be accomplished through or subsequent to central bank digital currency
proliferation.
Section 2 – High Level Use Cases, Case
Studies
This section explores significant efforts that have been made to pilot the use cases explored
throughout the paper. It outlines these efforts to provide a working understanding with regards
to how the aforementioned use cases can be applied in practice.
Section 2.1 – Digital Trade
Bay Area Trade Finance Blockchain Platform
The Chinese Central Bank recently piloted a program to operate a digital trade finance platform
that services the Guangdong, Hong Kong, and Macau regions. Headline participants include
numerous financial institutions with a heavy presence in the trade finance arena and the
country’s largest automobile brand.
The initiative’s ultimate goal is to bring low cost open trade finance solutions, financed by
network participating financial institutions, to SMEs. This target market accounts for SMEs
numbering in the many thousands that service more than one hundred million people across
these regions. In addition, there is a coordinated effort to stomp out money laundering that has
occurred through invoice schemes whereby multiple shell corporations throughout these regions
send copy invoices to other shell companies to facilitate illicit money transfers unnoticed.
The pilot program has processed over $4 billion in transactions to-date.
Further reading on the program:
https://www.ledgerinsights.com/chinas-central-bank-blockchain-trade-finance/
An Exploration Into DLT
Working Paper
Addendum 1
Page 24
Section 2.2 – Securities Digitization
Asset Backed Securities Digital Transformation
A large asset manager recently completed the initial phase for their pilot program focused on
digitizing the asset-backed securities lifecycle utilizing DLT. With more than $6.2 trillion in
assets under management
5
, the firm is exploring how DLT driven digital transformation for the
securities lifecycle can be a catalyst for lower costs and transaction processing times.
The pilot program successfully digitized all transactions in the respective asset-backed
securities lifecycle, from issuance to final maturity. The program featured major asset-backed
securities market participants including custody banks collectively responsible for more than $95
trillion in assets
678
and a large asset-backed securities issuer.
Further reading on the program: https://www.prnewswire.com/news-releases/vanguard-
advances-blockchain-technology-pilot-tostreamline-asset-backed-securities-markets-
301074465.html
Section 2.3 – Real Estate Tokenization
Luxury Resort Tokenization
A 170-room luxury resort in the Colorado, USA mountains recently completed an initial public
offering through a DLT powered token sale that gave investors rights to revenues generated
from the property in perpetuity. The sale generated $18 million in capital in exchange for 18.9%
ownership in the luxury property.
5
https://about.vanguard.com/who-we-are/fast-facts/
6
https://www.bnymellon.com/us/en/who-we-are/our-story.jsp
7
https://www.businesswire.com/news/home/20200717005229/en/State-Street-Reports-Second-Quarter-2020-
Financial-Results
8
https://www.streetinsider.com/Business+Wire/Citi+Custody+and+Fund+Services+Hires+Head+of+Client+Reportin
g/16357045.html
An Exploration Into DLT
Working Paper
Addendum 1
Page 25
The pilot program proved the viability in this novel market, validating market demand strength
and establishing precedence for comparable revenue generating real estate around the world to
follow suit.
Further reading on the program:
https://www.aspentimes.com/trending/in-18-million-deal-nearly-one-fifth-of-st-regis-aspen-sells-t
hrough-digital-tokens/
Section 2.4 – Central Bank Digital Currency
Argentina Wholesale CBDC
The Argentine Central Bank launched a pilot program in early 2020 for instant interbank
settlement utilizing digital currency issued by the Central Bank. This addresses inefficiencies in
local payment systems and introduces a blockchain-based digital standard for interbank
transfers between the nation’s financial institutions. Considering the lacking interoperability,
resilience, and reliability among local payment systems, the initiative has been well received.
The Central Bank chose a strategic private sector startup company to partner with in building its
digital currency solution. The company provides FinTech know-how, software expertise, and
experience-learned industry best practices. The Central Bank provides strategic support,
regulatory guidance, and access to its research and relationships.
The program is operating in a limited capacity with select banks in the country, with expansion
planned subsequent to further study on the risks and benefits present in a live CBDC
ecosystem.
Further reading on the program:
https://www.coindesk.com/argentinas-central-bank-trials-blockchain-for-new-interbank-settleme
nt-layer
An Exploration Into DLT
Working Paper
Addendum 1
Page 26
Additional reading on CBDC case studies can be found below.
1. IMF Head Highlights Digital Currencies To Be Top Priority in 2020 for Its 189 Member
Countries.
https://dailyhodl.com/2020/01/16/head-of-imf-highlights-digital-currencies-as-top-prior
ity-in-2020-for-its-189-member-countries/amp/
2. One in five people could have access to central bank digital currencies within three
years.
https://www.finextra.com/newsarticle/35156/one-in-five-people-could-have-access-to
-central-bank-digital-currencies-within-three-years?utm_medium=newsflash&utm_so
urce=2020-1-24&member=111873
3. Central banks collectively representing 1/5 the world's population say they are likely to
issue a general purpose digital currency in the next three years, according to a survey
from the Bank for International Settlements.
https://www.finextra.com/newsarticle/35118/central-banks-form-group-to-explore-digi
tal-currency-creation?utm_medium=newsflash&utm_source=2020-1-21&member=11
1873
4. Ghana Central Bank and CBDC
https://cointelegraph.com/news/ghanas-central-bank-confirms-its-still-looking-to-
pilota-digital-currency
5. Rwanda Central Bank and CBDC
https://blockchain.news/news/rwanda%E2%80%99s-central-bank-is-planning-to-issu
e-its-own-digital-currency
Section 3 – Specific Use Cases, Per Sub-
Sector
This section explores use cases that are applicable to specific sub-sectors and industries within
the global economy. These sub-sectors include real estate, agriculture, banking, trade, and
capital markets.
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Section 3.1 – Agriculture
Supply network digitization in the agriculture sub-sector that leverages DLT immutability offers a
significant improvement to a government’s ability to tax transactions in addition to creating a
more reliable and scalable supply network economy. In an ideal scenario, there would be a
widely distributed digital platform for facilitating services trade among agriculture supply network
companies that enables them to buy and sell services through the commodity productization
process. These transactions would be recorded on a secure, immutable DLT for verification and
regular auditing by taxation authorities and industry regulators.
Section 3.2 – Real Estate
The total global real estate market exceeds $280 trillion in value, with residential real estate
representing $220 trillion, commercial real estate representing $33 trillion, and agricultural &
forestry real estate representing $27 trillion.
9
Yet, only $9.6 trillion in the global real estate
market is professionally equitized and managed.
10
The challenge therein provides an
opportunity to implement a DLT framework for real estate tokenization. Tokenization enables
instant, digital verification for property deed ownership and subsequent trading among real
estate market participants. Proper real estate tokenization requires government support with
regards to meeting required quality and maintenance standards and corresponding regulatory
approvals for ownership transfer in each respective market. In an ideal scenario, there would
exist a standardized DLT based international digital deed issuance framework and each
participating government agency would create a digital deed for every property in their records.
The digital deeds would then be transferred to a digital account owned by each property owner
for holding or subsequent resale in a fractional or in holistic manner. Banks with modernized
and reliable technology infrastructures could support automated payouts to tokenized real
estate holders from real estate with cash flow from business operations or tenant revenues.
Section 3.3 – Banking and Financial Services
Widely distributed DLT based central bank digital currency (CBDC) would be a significant boon
to the banking sub-sector with regards to key high level goals like financial inclusion and real
time transaction settlement. In a wholesale CBDC model, financial institutions and financial
technology companies have little to no transaction costs and settlement times between each
other, enabling them to create scalable and profitable financial services solutions to bring
9
https://www.savills.com/impacts/market-trends/8-things-you-need-to-know-about-the-value-of-global-real-
estate.html
10
https://www.msci.com/documents/1296102/19878845/MSCI_Real_Estate_Market_Size_2020.pdf/06a13e2c-
0230-f253-26fa-3318cecb1c59
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unbanked and underbanked populations into the banking system. Ensuring financial inclusion
through a DLT based CBDC ultimately supports a more healthy and active financial system that
works for most people, not just the socio-economic ladder’s upper echelons.
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Addendum 2
Introduction
This addendum to the An Exploration Into DLT working paper will provide implementation details
for DLT use cases applicable to emerging market economies.
Section 1 - Use Case Implementation Details
To ensure comprehensive understanding with regards to the structure and requirements that
correspond with implementing high priority DLT use cases, this section will outline the multiple
consideration points therein. The use cases considered herein will include DLT applications
within trade & agriculture, capital markets, real estate, and remittances. Note that technology
provisioning can be accomplished with relative ease by licensing DLT platforms from major
enterprise-grade software vendors like Symbiont. Payments settlement will occur through bank
wires, with the expectation that central bank digital currency will be wide utilized once it
becomes available.
Section 1.1 - Trade & Agriculture
Trade & agriculture DLT solutions with the largest addressable market focus on trade finance.
The use case implementation focused on in this section will therefore be a digital trade finance
solution tailored for emerging market economies. The specific implementation considerations
explored will include structure and process.
Section 1.1.1 - Structure
An ideal digital trade finance solution powered by DLT will include a consortium with public
sector and private sector participants. Participants will operate nodes on the DLT network,
which will ensure network data integrity and consistency. Commodity sellers, productizers,
service providers, government regulatory agencies, trade financing institutions, importers, and
exporters will have a discovery mechanism (i.e. request for quotes) available to them whereby
each will be able to find counterparties for their trade activity in addition to other relevant
participating parties. Counterparties, service providers, government regulatory agencies, and
financing institutions will establish transactional channels amongst each other to facilitate trade
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in a streamlined manner through the trade lifecycle, enabling seamless multi-lateral
communication, financing, settlement, and if required network administration arbitration.
Section 1.1.2 - Process
The trade facilitation process will begin with a request for quotes from a buyer (e.g. importer,
productizer) or seller (e.g. exporter, productizer), which will be distributed among all relevant
network participants that qualify under initiator-defined parameters. Qualifying counterparties,
service providers, and financing institutions will provide their quotes for participation in the trade,
with transaction data being automatically calculated per each quote combination for review by
the trade initiator and subsequent acceptance or declination. When the trade initiator selects a
quote combination with the parties that offer best-fit terms and pricing, each party becomes
legally obligated to meet their set expectations and verify activity completion for recording on the
network ledger. If any complications arise due to disagreement among participating parties,
network administrators (e.g. government regulatory agencies) can review trade terms and
activity recordings on the ledger for proper and auditable arbitration.
Section 1.2 - Capital Markets
Capital markets DLT solutions with the largest addressable market focus on securities
digitization. The use case implementation focused on in this section will therefore be a securities
digitization solution tailored for emerging market economies. The specific implementation
considerations explored will include structure and process.
Section 1.2.1 - Structure
An ideal digitized securities solution powered by DLT will include regulator ensured standards
for digital securities issuance, corporate actions, and maturation among regulated securities
market participants. Regulator ensurement effectively brings the entire securities lifecycle onto a
DLT. Regulated securities market infrastructure providers (e.g. exchanges, prime brokers,
clearing houses, custodians) and large market participants will be network nodes, and in turn
provide facilitation services throughout securities’ lifecycles. Issuers, buy side institutions, sell
side institutions, infrastructure providers, and government regulatory agencies will establish
transactional channels amongst each other directly or through their infrastructure providers to
facilitate events in a streamlined manner through the security lifecycle, enabling seamless
multi-lateral communication, primary & secondary market counterparty information exchange,
post-trade settlement, corporate actions, and if required network administration arbitration.
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Section 1.2.2 - Process
The digitized securities process will begin with issuance, whereby a securities issuer will send a
digital request for approval to the applicable regulatory government agency to issue the desired
securities. The request will include detailed, standardized information and documentation on the
issuance and relevant corporate information, which will all be stored on the network ledger.
Trusted issuers can go through an expedited and largely automated process whereby the
provided data will be analyzed through smart contracts and non-trusted issuers will likely go
through a more comprehensive manual review before regulatory approval. Once regulatory
approval has been provided, the issuance automatically occurs and the issued securities
become available to all network participants in a primary market. When issued securities are
traded in the secondary market, market infrastructure providers that facilitate the trades will
report transaction details on the ledger and initiate settlement actions accordingly. The digital
securities are then transferred to and from relevant parties on the network. Corporate actions
will be initiated by securities issuers and enacted on an automated basis with impact details
being provided to relevant network participants in a comprehensive manner. Upon final
securities maturation, automated redemption with the respective issuer will become possible in
addition to the standard network actions set. If any complications arise due to disagreement
among participating parties, network administrators (e.g. government regulatory agencies) can
review issuance and relevant transaction terms and activity recordings on the ledger for proper
and auditable arbitration.
Section 1.3 - Real Estate
Real estate DLT solutions with the largest addressable market focus on real estate tokenization.
The use case implementation focused on in this section will therefore be a securities digitization
solution tailored for emerging market economies. The specific implementation considerations
explored will include structure and process.
Section 1.3.1 - Structure
An ideal real estate tokenization solution powered by DLT will include a federal government
mandated framework for deed issuance, assignment transfers, and payouts for real estate with
cash flow. National government ensured standardization creates interoperability amongst all
market participants, regardless their locality. Each property deed will be represented through a
fungible tokens set issued on the DLT, for fractional or holistic sale to real estate owners and
investors. Real estate portfolio managers & investors, brokers & dealers, custodians, property
managers, and regulatory government agencies will be network nodes, and in turn provide
facilitation services with regards to real estate sales, payouts, and ownership & assignment
transfers. Real estate portfolio managers & investors, brokers & dealers, custodians, property
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managers, and regulatory government agencies will establish transactional channels amongst
each other directly or through their infrastructure providers to facilitate events in a streamlined
manner through sales, payouts, and assignment transfers, enabling seamless multi-lateral
communication, primary & secondary market counterparty information exchange, government
approvals, post-trade settlement, payouts, and if required network administration arbitration.
Section 1.3.2 - Process
The real estate tokenization process will begin with digital property deed issuance, whereby the
regulatory government agencies responsible for real estate ownership records will issue digital
token sets to represent all real estate in their jurisdiction. Issued tokens will then be assigned to
the respective registered owners for represented real estate directly or through a network
participant custodian or proxy. Payouts for real estate with cash flow will be automated and sent
from the direct revenue recipient (e.g. property manager) to respective real estate token holders
proportionate to the total token float percentage held. Upon real estate token(s) sale, in a
fractional or holistic manner, the corresponding government filings and approvals or declinations
will be automated, and if approved the token transfer will occur from previous owner to the new
owner directly or through their network participating custodian or proxy.
Section 1.4 - Remittances
Remittances DLT solutions with the largest addressable market focus on receiving remittances
in emerging markets from the receiving countries’ global diaspora. The use case implementation
focused on in this section will therefore be a receiving remittances solution tailored for the
emerging market economies. The specific implementation considerations explored will include
structure and process.
Section 1.4.1 - Structure
An ideal receiving remittances solution powered by DLT will include a global multicurrency
central bank digital currency system. However, such a system may be years from widespread
adoption and will require extensive resources and collaboration. A practical receiving
remittances solution powered by DLT that can be implemented in a reasonable timeline with
minimal public sector resource requirements will include a bitcoin transfer and conversion
mechanism between retail customer-focused financial institutions in remittance sending
countries and retail customer-focused financial institutions in the recipient country. Utilizing
bitcoin for transfers ensures minimal costs and processing times relative to traditional
international money transfer mechanisms. Participating regulated financial institutions will be
nodes on the bitcoin network, providing facilitation services for senders and recipients through
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the remittance lifecycle. Participating financial institutions will establish transactional channels
amongst each other to facilitate bitcoin transfers in a streamlined manner enabling seamless
multi-lateral communication and if required regulator or third party arbitration.
Section 1.4.2 - Process
The remittance facilitation process will begin with the remittance sender initiating a remittance
transaction at a network participating financial institution in the sender’s country. The sender will
provide sending country local currency denominated funds, sent through local electronic funds
transfer or cash in addition to identifying information for the recipient. The respective network
participating financial institution in the sender’s country will then instantly convert these funds
into bitcoin and transfer the bitcoin and corresponding recipient information to the respective
participating financial institution in the recipient’s country. The respective network participating
financial institution in the recipient’s country will instantly convert received bitcoin into recipient
country local currency to be stored until retrieval by the recipient. The recipient will initiate a
remittance redemption at their respective network participating financial institution and provide
identity proof that matches with the information provided by the sender. Once identity has been
verified by the sender’s respective network participating financial institution, local currency
denominated funds will be dispensed in cash or electronic funds transfer.
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Addendum 3
Introduction
This addendum to the An Exploration Into DLT working paper will provide details on government
revenue generation and collection with regards to previous explored use cases, as well as
additional details on the proposed central bank digital currency concept proof.
Section 1 - Government Revenue Generation
& Collection
To ensure the comprehensive understanding with regards to a government’s ability to generate
and collect revenues in a DLT network, this section will outline the multiple consideration points
therein.
With regards to revenue generation, a government will be able to charge network participation
fees that can be structured in a per year format (e.g. 10k USD per year) or in a per transaction
format (e.g. 0.25% per transaction). This can be automated to mitigate resource requirements
by ensuring relevant regulator(s) operate nodes on the DLT network with read-access to all
transactions. Transaction automation functionality will enable these fees to be taken out from
network participant accounts and sent to the corresponding regulatory agency in real-time or on
a predetermined schedule.
With regards to taxation collection, all per-transaction taxes will be calculated and presented to
transaction parties for approval before they verify their interest in participation and per-year
taxes will be presented to network participants in real-time or on a predetermined schedule and
withdrawn from network participants accounts at fiscal year-end, if applicable. The
corresponding tax regulator(s) will be a network participant with read-access to all transactions,
enabling them to receive payment and audit transactions and participants in an automated
manner.
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Section 2 - CBDC Concept Proof
The CBDC framework provided previous supplies operating and technical details for its
implementation. This section will provide more specific information with regards to how a near-
term implementation can be accomplished to meet all expectations.
A minimum viable product will require at least two regulated financial institutions with accounts
at the issuing Central Bank and the issuing Central Bank itself to participate in the CBDC
network. The concept proof should achieve the following deliverables.
● Interbank connectivity through transactional channel creation on the DLT network.
● Interbank transfers with instant settlement and transaction finality.
● Interbank transfers with zero costs.
● Immutable and auditable transaction trail for all CBDC transactions on the network
ledger.
● Automated AML/CTF compliance monitoring and reporting for the issuing Central Bank.
● Automated taxation calculations and collections.
The proposed distributed ledger technologies for the concept proof are as follows.
● Symbiont Assembly
○ Symbiont Assembly is recommended for full deployment due to its proven quality,
design, and scalability; utilized by banks around the world custodying more than
27 quadrillion NGN in assets.
● Rootstock RSK
○ Rootstock RSK is a widely utilized and proven DLT that other central banks
leverage for concept proof in the wholesale CBDC arena (e.g. Argentina).
● Lightning Network
○ Lightning Network is a highly scalable DLT that can achieve up to 1 million
transactions per second however, has only been utilized for small scale concept
proofs.
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Addendum 4
Introduction
This addendum to the An Exploration Into DLT working paper will provide details on technology
selection criteria and process with regards to the proposed wholesale central bank digital
currency concept proof.
Section 1 - Selection Criteria Table
Satoshi
Capital
Advisors
Symbiont
Assembly
Rootstock
RSK
Lumino
Lightning
Network
Omni
Layer
Chromaway
Postchain
Ethereum
Hyperledger
Fabric
R3 Corda
Permissioned
Yes
Yes
Yes
No
Yes
No
Yes
Yes
Enterprise
Deployment
Yes,
Extensive
Yes,
Extensive
Yes,
Limited
No
Yes, Limited
No
Yes,
Extensive
Yes,
Extensive
Scalability
(Tx/Second)
80,000
5,000
1,000,000
7
10,000
15
20,000
6,000
Launched
2015
2018
2018
2013
2017
2015
2017
2016
Code Base
Closed
Source
Open Source
Open
Source
Open
Source
Open Source
Open
Source
Open Source
Open
Source
Immutable
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Auditable
Yes
Yes
Yes
Yes
Yes
No
Yes
Yes
Maintainer
Symbiont
RIF Labs
Lightning
Labs
OMNI
Foundation
Chromaway
Ethereum
Foundation
Linux
Foundation
R3
Maintainer
Type
Institutional
SME
Startup
Hobbyist
SME
Hobbyist
Institutional
Institutional
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Section 2 - Selection Process
The technology selection process included comparing technologies in three distinct categories
to ensure fair ground: those with (1) institutional maintainers, (2) SME maintainers, (3) startup
maintainers.
Comparison utilizing the table above resulted in the following technologies being selected: (1)
Symbiont Assembly, (2) Rootstock RSK Lumino, (3) Lightning Network. Cost considerations
vary per technology and country.
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Addendum 5
Introduction
This addendum to the An Exploration Into DLT working paper will provide details on applicability
with regards to the major distributed ledger technologies and the previous explored use cases.
Section 1 - Selection Criteria Table
Satoshi
Capital
Advisors
Distribution
Optimal
DLT 1
Optimal
DLT 2
Optimal
DLT 3
Optimal
DLT 4
Optimal
DLT 5
Trade
Finance
Wholesale
Symbiont
Assembly
R3 Corda
Hyperledger
Fabric
Chromaway
Postchain
Rootstock
RSK Lumino
Digital
Securities
Wholesale
Symbiont
Assembly
Hyperledger
Fabric
Chromaway
Postchain
R3 Corda
Rootstock
RSK Lumino
Digital
Securities
Retail
Hyperledger
Fabric
Rootstock
RSK Lumino
Chromaway
Postchain
R3 Corda
Omni Layer
Real Estate
Tokenization
Wholesale
Symbiont
Assembly
Rootstock
RSK Lumino
Chromaway
Postchain
Hyperledger
Fabric
R3 Corda
Real Estate
Tokenization
Retail
Rootstock
RSK Lumino
Hyperledger
Fabric
Chromaway
Postchain
R3 Corda
Omni Layer
Remittances
Retail
Lightning
Network
Rootstock
RSK Lumino
Hyperledger
Fabric
Chromaway
Postchain
R3 Corda
Central Bank
Digital
Currency
Wholesale
Symbiont
Assembly
Hyperledger
Fabric
Chromaway
Postchain
R3 Corda
Rootstock
RSK Lumino
Central Bank
Digital
Currency
Retail
Rootstock
RSK Lumino
Hyperledger
Fabric
Chromaway
Postchain
R3 Corda
Omni Layer
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Section 2 - Selection Process
The technology selection process included comparing technologies across multiple distinct
categories including: (1) existing enterprise-scale utilization, (2) existing integration into market
infrastructure, (3) scalability requirements, (4) accessibility requirements, (5) technology
robustness, (6) maintainer provenness, (7) time-in-market, and (8) ledger reliability.
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Addendum 6
Introduction
This addendum to the An Exploration Into DLT working paper will provide elaborative details on
assumptions made throughout the paper with regards to DLT data integrity and DLT applicability
to large scale efforts in addressing financial inclusion.
Section 1 – DLT Data Integrity
Distributed ledger technology, except centrally governed systems (e.g. ethereum), by design
offers a more reliable immutability guarantee than traditional database technology in that the
ledgers are distributed among and mutually governed by network participants, ensuring every
participant can audit and verify every other participants' ledgers. This ensures that any
unauthorized or invalid modification to a network participant's ledger will not be accepted by the
broader network. In addition, every DLT design differs in architecture and methodology for
achieving consensus for ledger additions that impact scalability and the trust level allocated to
certain network participants. In a public DLT network (e.g. bitcoin) the goal is to achieve
trustless consensus, which limits scalability due to its large participant set. In a private DLT
network (e.g. Symbiont Assembly) superior scalability can be achieved due a tailored
consensus mechanism with some trust being allocated to key network participants.
Section 2 – Financial Inclusion
Distributed ledger technology offers an effective solution to address financial inclusion goals,
both at a large scale and local level. Financial systems today are not built for large population
segments in emerging markets with regards to low- and variable-income residents. This is
largely due to nonideal compliance and payments infrastructure. Modern payment systems in
emerging markets are not well designed for low-mid value payments (<$200), particularly when
they are cross-border (e.g. remittances). The time to complete local currency transfers can
sometimes take days and cost a significant percentage in fees for low value payments. Banks in
emerging markets often struggle with effectively meeting AML/CTF requirements for low- and
variable-income customers because they can only see input/output transactions, not a
comprehensive transactional ledger including preceding and subsequent transactions. With the
large quantity in residents fall into the low- and variable-income category, addressing these
challenges becomes a monumental task.
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DLT (e.g. wholesale CBDC) can enable transaction monitoring and pattern recognition on
preceding and subsequent transactions while pseudonymizing individuals by only maintaining
ledger level identities for the institutions facilitating their transactions. Any institutions that are
flagged for suspicious transactional patterns or nefarious dealings can be requested by
regulators to do extended due diligence on customers and file suspicious activity reports
accordingly. If questionable activity continues, regulators can request customer information to
do direct due diligence and potentially levy fines or other regulatory action against the institution
for non-action. Government support for community development financial institutions (CDFIs)
helps address the last mile servicing issues for low- and variable-income residents. For
example, localized e-wallets that are government backed or supported would provide a viable
payments solution for this customer segment, introducing ample market competition and
ultimately leading to superior products. These e-wallets can more effectively offer a diverse
product suite to the low- and variable-income market segment (e.g. interest on holdings,
discounts to local merchants, investment and savings, etc.) due to their digital-first nature and
specialized infrastructure. These e-wallets can then be connected to a national or global
wholesale CBDC system to enable free or low-cost payments.
In addition, an international pseudonymized ID system would be helpful in ensuring that global
citizens can send and receive funds in a streamlined manner. This can be achieved through
creating a global network with an identifying number attached to every KYCd account at a
financial institution, regardless where that institution is based. This would enable a migrant
worker in the USA with a KYCd bank account in Mexico to send and receive funds electronically
in a streamlined manner utilizing their global account number for identification. The IBAN
system provides a working example for how this can be achieved. A global CBDC system could
process payments, and global account numbers could be ported to local banks and e-wallets to
ensure convenience. Note that this would also require all banks on the IBAN or new system to
maintain a global standard with regards to KYC.
