German blockchain software developer SWIAT, in collaboration with 10 European financial institutions, has launched Regulated Layer One (RL1). The initiative is described by the firm as “a collective European effort designed to establish the foundation for a common distributed ledger under open and credible governance”.

SWIAT claims in a press release that RL1 will be “open to a wide range of use cases from native digital assets, tokenised traditional assets, various settlement options, and cash-on-chain solutions”.

Solid foundations

RL1 will use SWIAT’s DLT network and contractual framework. Both have been optimised for regulatory compliance and will be transitioned from SWIAT into a new European cooperative structure that will be jointly owned, operated, and governed by European financial institutions. SWIAT GmbH will remain as software supplier and service provider for RL1 after the handover of the DLT infrastructure.

Having been in production for more than two years, SWIAT’s DLT network has had a proven track record with more than 40 transactions accounting for more than €600 million in volume. RL1 has been designed to be fully compatible with SWIAT’s software, so that immediate implementation for use cases such as bond tokenisation will be possible. RL1 participants can also develop their own solutions on the platform.

For greater good

RL1 aims to become a “pan-European, neutral, and interoperable blockchain for digital assets and payments”. Its focus is on building a blockchain layer that “enables market participants to deploy and scale specific use cases in a secure, trustworthy, and permissioned DLT environment, governed by the participating institutions”.

Its main differentiator from commercial platforms is that it was “conceived as common infrastructure operated for the benefit of its members”. Issuers, investors, infrastructure providers, marketplaces, trading counterparties, and cash solution providers can use one infrastructure and share a common set of rules, resulting in true interoperability. To achieve this, RL1 is working towards setting up a European Cooperative Society (SCE) with a governance structure that prevents a single partner, group of developers, or node operators from getting undue control over the network.

Team work

The 10 European institutions already on board are ABN AMRO, DekaBank, DZ Bank, KFW, LBBW, Natixis Corporate and Investment Banking, NatWest, Seturion of Boerse Stuttgard Group, SC Ventures of Standard Chartered Bank, and V-Bank.

Dr. Timo Reinschmidt, Co-CEO and CCO of SWIAT, says, “RL1 is a great example of how privately led initiatives can support the digital transformation towards a unified and shared infrastructure supporting the financial sector. The positive feedback from European private and public sector stakeholders has proven the need for a common DLT infrastructure owned by market participants. With its European cooperative design and commitment to neutrality, RL1 avoids the pitfalls of siloed or rent-seeking models and instead acts as enabling infrastructure for the benefit of Europe’s financial ecosystem.”