To demonstrate the potential of UDPN, Standard Chartered’s SC Ventures and Deutsche Bank conducted a trial.
This groundbreaking initiative aims to revolutionize the way digital payments are conducted by connecting payments across various Central Bank Digital Currency (CBDC) and blockchain networks, using a messaging system similar to Swift.
The Birth of UDPN
UDPN is not the brainchild of Standard Chartered and Deutsche Bank alone. It was founded by Red Date Technology, the co-founder of the Chinese Blockchain-Based Service Network (BSN). The development of UDPN has been a collaborative effort involving GFT, a prominent consultancy firm, and DLA Piper’s digital asset initiative TOKO.
The primary aim of UDPN is to address the adoption barriers currently faced by digital currency offerings. With the proliferation of CBDCs, stablecoins, and deposit tokens, a lack of interoperability has become evident. The exchange of stablecoins is mainly facilitated through centralized crypto exchanges, which often lack regulatory oversight, making them unsuitable solutions for CBDC and deposit token interoperability.
Moreover, for mainstream adoption of digital currencies, there is a need for robust Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures. UDPN aims to provide a decentralized identity infrastructure to enable compliance and cross-chain interoperability through message exchange, rather than actual currency transfer.
This means that users can seamlessly swap, for instance, a USDC stablecoin on one network for a Euro stablecoin on another or a bank deposit token, while the currency transactions occur on their respective native blockchains.
SC Ventures and Deutsche Bank UDPN Trial
To demonstrate the potential of UDPN, Standard Chartered’s SC Ventures and Deutsche Bank conducted a trial. During this trial, they executed real-time transfers and swaps of synthetic USDC and EURS (Stasis Euro stablecoin) to Deutsche Bank wallets and vice versa. SC Ventures utilized code based on UDPN Software Development Kits (SDKs) and Application Programming Interfaces (APIs), while Deutsche Bank employed a graphical user interface.
Rafael Otero, CTO & CPO of Deutsche’s Corporate Bank division, expressed enthusiasm for the project, stating that “the industry pilot on the UDPN platform is an opportunity to investigate and research how we can enable our clients to actively participate in the decentralized future global economy and benefit from applications that are built on top of the network.”
The UDPN trial conducted by SC Ventures and Deutsche Bank is just the beginning. UDPN has plans for a dozen PoCs, each exploring different use cases. These include enabling banks to issue deposit tokens for client use and facilitating interbank wholesale settlement. Another PoC focuses on supporting gasless transactions on a public blockchain.
As the UDPN project progresses, it has the potential to become a game-changer in the world of cross-border payments. Its emphasis on security, compliance, and interoperability makes it an exciting development in the ongoing evolution of digital currencies and financial technology.