Chinese Blockchain Company Develops Payment System for Stablecoins and CBDC
A China-based blockchain company has recently launched a digital payment protocol to fill the gap between stablecoins and Central Bank Digital Currency.
Red Date Technology is a Hong Kong-based blockchain company that is among China’s leading blockchain infrastructure. The company launched its Universal Digital Payment Network (UDPN) on Thursday 19 January 2023 at the World Economic Forum (WEF) meeting in Davos, Switzerland.
According to the white paper, UDPN is a distributed ledger technology (DLT) platform that serves as the Society for Worldwide Interbank Financial Telecommunications (SWIFT) network. SWIFT works for traditional banks, but UDPN will work for stablecoins and CBDCs.
“Just as the SWIFT network created the original common standard for messaging between financial institutions across different settlement systems, the UDPN will serve the same purpose for the new generation of CBDCs and stablecoins.”
The press release dated January 19, 2023, notes that a “number of global tier 1 banks” are already involved in use case proof of concepts (POCs) to investigate the network for cross-border transfers and swaps.
Although the press release did not reveal the name of the banks participating in the POCs, Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia and Akbank were represented on the panel at the UDPN launch during the WEF meeting in Davos.
The press release highlights, “The network will only support CBDCs and regulated fiat-backed stablecoin currency systems as payment methods.”
“No unregulated public-chain cryptocurrencies, such as Bitcoin, will be accepted. The addition of new currency is subject to a vote by the UDPN Alliance members as part of the network’s decentralized governance approach.”
“A development objective of UDPN is to work within a regulated landscape designed for payment services; crypto-assets or unregulated stablecoins cannot be adopted universally (even at the regional level) for this purpose and are therefore not supported by the network.”
8 other proof of concept tests are planned for the network, including the issuance and circulation of a CBDC and a bank-issued stablecoin and the use of UDPN as an e-commerce payment gateway.
Marika Lulay, CEO of GFT, said: “The purpose of UDPN is to investigate a potential alternative to existing payment systems by enabling interoperability between fiat-backed tokens of stablecoins and regulated protocols.”
Marika added: “The decentralized approach and geographical breadth of participating firms, combined with the advanced technological solution deployed for these trials, sets this network apart.”
Nancy J. Allen is a crypto enthusiast and believes that cryptocurrencies inspire people to be their own banks and step aside from traditional money exchange systems. She is also fascinated by blockchain technology and its function.
