Key Takeaways:
- As part of Episode Six, it has introduced Verified Backing for bank-issued stablecoins and tokenized deposits.
- The system checks backing at issuance and redemption, not only after transactions.
- Available in 50+ markets, Episode Six operates worldwide.
With its E6 Token Control Ledger, episode Six has added a real-time verification layer for banks releasing stablecoins and tokenization deposits. Verified Backing is a new capability intended to ensure that a token provides backing upon issuance, and upon subsequent redemption by a customer.
Episode Six Checks Stablecoins at Two Critical Moments
Verified Backing works at the issuance and redemption, the two areas in which banks may have the highest risk of using tokenized money.
Before a bank creates a supported stablecoin or tokenized deposit, the system verifies that the required backing has been recorded. It will involve a validation check to ensure at redemption that the token has not been cashed out already, and that the bank’s ledger bears its support.
Episode Six situates it in one that challenges and moves beyond the practice of traditional reconciliation where inconsistencies are only discovered after transactions.
Read More: MoneyGram Launches Stablecoin Card in Colombia, Bringing Crypto Payments to 60M Users
Checks Continue Even After Tokens Move Across Wallets and Chains
The verification process runs inside the issuing bank’s E6 Token Control Ledger. Even if a token passes through several wallets or blockchain networks before it comes back to the bank, episode Six will apply the redemption check.
This provides the issuing institution with a more complete record on the bank side, with which to check the status of the token, as opposed to just after issuance.
Verified Backing Targets Stablecoin Redemption Risk
An important issue about banks that issue tokenized money is, does an asset presented for a redemption amount correspond with a valid outstanding obligation?
It’s not just the question of whether tokens were legitimate at creation, it’s about whether they are legitimate at redemption, said Episode Six APAC Managing Director, Daryn Griggs.
Verified Backing is meant to assist banks in answering that question in real time by verifying the status of the token and the validated backing before money leaves the bank’s vaults.
Read More: 37 European Banks Bring Euro Stablecoin to Ethereum in $300B Market Shake-Up
Episode Six Expands Tokenized Banking Infrastructure
Verified Backing will be added to the Episode Six Token Control Ledger for users in the markets that Episode Six is available in.
The company offers card issuing and ledger infrastructure across over 50 countries across millions of accounts and billions of payment transactions around the world.
The feature could be extended to tokens or tokenized deposits issued by a bank and enter their supported alphabetic stablecoin, says Episode Six.
The launch follows a trend toward an infrastructure that allows banks to create and oversee the tokenization of money, all while retaining the ability to directly oversee backing, redemption and internal records.
