tech vision MarjanDelatinne

Amid the hype around cryptocurrencies, Marjan Delatinne, payments lead at SETL, outlines why the central bank digital currency and market infrastructure space holds promise.

On January 19, Banque de France (BDF) announced it had completed a live central bank digital currency (CBDC) transaction — the settlement of a fund — using the SETL blockchain, which powers the IZNES fund record-keeping platform.

A few weeks later, Marjan Delatinne officially joined SETL — a specialist in building distributed ledger technology (DLT)-based solutions for financial markets — to head up its payments business. It was this real-life deployment of a CBDC that encouraged her to work for the start-up.

“SETL’s market infrastructure pillar was quite advanced because it works with real volumes and connects to existing market infrastructure, like Target2-Securities (T2S),” she says. “The BDF project used the same delivery versus payment (DvP) mechanism on the fund platform to go through the whole lifecycle of the CBDC, including issuance, distribution and redemption, with the real money.” It showed that SETL’s DvP engine is flexible, and multi-party- and multi-asset-compatible.

Career history: Marjan Delatinne 

  • 2021 SETL, managing director, payments
  • 2017 Ripple, global head of banking
  • 2015 Swift, business director, Swift gpi
  • 2014 Swift, head of business development, payments market initiatives

And while 2020 was an experimental year for central banks exploring their own digital currencies, Ms Delatinne believes that 2021 will be the year that the industry realises how DLT can be deployed to build a healthy financial ecosystem.

“Obviously, this is not going to happen overnight because there are still important questions, especially around identity and privacy. However, CBDCs will be the driver to make this technology scalable and regulated. Because a CBDC will not come to the market alone; it needs regulation, more specifically, authorities need first to be confident that issuance would not compromise monetary or financial stability,” she adds.

Unlocking value

Ms Delatinne firmly believes that DLT will be a game changer in market infrastructure. Despite her bullish outlook, it is still a nascent technology with much of the hype surrounding it associated with cryptoasset speculation. But its transformational potential lies in its ability to move from a traditional account-to-account way of transferring value to one that is tokenised, she argues.

Tokenisation is the process of converting assets recorded in an account system into digital tokens on a blockchain. “It completely changes the way a payment is processed, cleared and settled. In particular, it gives direct access to the ledger to all participants, which facilitates instant settlement,” she explains. “From an end-user perspective, it makes a lot of sense because the client can affect change within one single instruction, without the need for multiple intermediate processes.”

It also simplifies many complex systems in making a payment, she argues. “Issues such as reconciliation and dispute management — which are difficult for legacy systems — are resolved by being part of the same ledger.”

Addressing identity

SETL has three pillars: market infrastructures, assets management and payments. Ms Delatinne was brought in to build and develop the payments pillar, following her long career at the heart of the financial markets, including working at Euroclear and Swift (during which time she was in charge of commercialising T2S and Swift gpi). Most recently, she worked for the blockchain start-up Ripple.

“SETL has extensive experience with tokenisation and now we are moving towards payments,” she says. “SETL is also addressing the compliance part, which is the most important part of the payment. A payment is all about identity, which is what makes it complex, particularly in the cross-border space.”

A payment is all about identity, which is what makes it complex, particularly in the cross-border space

Marjan Delatinne, SETL

As Ms Delatinne indicated, SETL is shaping its payments products around tokenisation for both value and compliance data. In terms of digital identity, SETL is working on a solution to enable the pre-validation of the typical information needed in the regulated world that banks operate in today, such as the payer or payee, which is difficult across different instruments or channels, like mobile wallets. “We think that increasingly digital identity will be part of the wallet,” she says.

The solution is called Verafide, and is powered by SETL’s core ledger. It is also SETL’s first open-source project, which means it will be freely available to the market. Verafide brings identity verification to the wallet, and identity is managed securely with biometrics. The use of verifiable credentials (W3C standard) ensures that the identity attributes can be shared, and verified securely and privately by the applications, smart contracts and wallets alike. “It becomes possible to connect verifiable credentials to each payment instruction,” she says.

Promising future

“The use of the cryptographic techniques of blockchain, together with digital identity, will definitively change the way that the payments will be experienced in the future,” she adds.

While some regional projects are looking to improve cross-border payments, including Buna in the Middle East and P27 in the Nordics, these initiatives are limited in scope, according to Ms Delatinne. “These initiatives are a step forward; they are streamlining payments and improving integration in the region, as well as attracting liquidity, businesses interest and investors. However, they are not enabling the full interoperability and are still closed-loop systems,” she says. “So there is still a long way to go to enabling the internet of value, where value is exchanged as easily as information.”

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