TD Bank Patents Settlement Between Assets of Different Value Types (such as Crypto)

by Tim Sloane 0

This article in CCN.Com discovered a TD Bank US patent which CCN describes as a Blockchain enabled POS, although the patent can likely be applied more broadly; it specifies a real time exchange of funds between accounts that contain different currencies. The patent name is “REAL TME VIRTUAL DRAFT SYSTEM AND METHOD” and one assumes TME was supposed to be TIME. The use of the term “draft” is interesting in that a draft is a pre-funded payment instrument which implies the bank has control of the account, something difficult to attain when operating with existing cryptocurrencies and blockchain.

A part of the abstract from the patent itself is quoted in the article and from that it is clear the patent can be applied to many payment environments, including bill pay, remittance, and account to account transfers, as well as a POS:

“The Canadian parent conglomeration of the 9th largest bank in the United States, Toronto-Dominion Bank, has had a blockchain patent submitted to the US patent office since September of 2016. The patent covers a “virtual draft system and method” and includes the words “block chain” in such combination exactly 10 times.

The patent application, like most patent applications, uses the broadest possible language when describing blockchain technology, such that it’s not immediately evident what we’re reading about when they say something like:

[…] a signal representing a request comprising a first transfer from a first digital container associated with a first client to a second digital container associated with a second client; compare a value of the first transfer to a total value in one or more accounts associated with the first client, wherein at least one of the one or more accounts associated with the first client has a value in a first currency; and generate a first draft from a first account to an account associated with the second client, wherein the first draft comprises a value in a second currency equivalent to the value of the first transfer.”

While the patent may mention blockchain as an asset that could be converted, it is unlikely a patent would be so specific:

“From the sounds, the user will have a form of payment which grants access to multiple accounts, and one of these accounts must have funds in the currency being dealt in. Another provision of the system described is that it will sometimes support — yep — blockchain tokens, such as Ether or Bitcoin.

This disclosure provides systems and methods for real-time drafting for transactions including a transfer of a digital asset tracked as a distributed electronic ledger, such as a block-chain ledger. A first party initiates a transaction including a transfer of a digital asset, such as a distributed ledger-based currency. The transaction is provided to a central authority for authorization and/or real-time drafting.

Such payment forms exist today, wherein essentially all of one’s accounts can be accessed, but they are very nascent. If there’s any group which will take more interest in this development than cryptocurrency enthusiasts, it will be Paypal and similar efforts as well as other banks who may have either competing products or existing intellectual property.”

The article then goes on to describe how patents are often used to make claims that might extend into existing solutions, such as a blockchain, and describes recent activity by a troll to gather a collection of patents that would apply to blockchain technology.

Overview by Tim Sloane, VP, Payment Innovation at Mercator Advisory Group

Read the quoted story here