Chinese Blockchain Firm Launches Digital payment System for Stablecoins and CBDCs
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Since cryptocurrencies and stablecoins were launched, these financial tools were touted as the natural evolution of cross-border payments. However, a new system is looking to develop the global standard for this use case.
Taking the Battle to SWIFT
Last week’s World Economic Forum (WEF) at Davos, Switzerland, featured several panels dedicated to promoting blockchain technology and cryptocurrencies, especially regarding the optimization of cross-border payments. One of the most notable industry-related developments at the event was the launch of a digital payments system that will use stablecoins and central bank digital currencies (CBDCs) to facilitate this operation.
Launched by blockchain infrastructure firm Red Date Technology, the Universal Digital Payment Network (UDPN) is looking to become the standard for using bank-issued stablecoins and CBDCs to facilitate and optimize cross-border payments across the board. Essentially, it is looking to biome the Society for Worldwide Interbank Financial Telecommunications (SWIFT), but for digital assets.
According to its whitepaper, the UDPN will be a blockchain platform that will serve a similar purpose to the current SWIFT system. The only difference is that while SWIFT will use cash and traditional money transfer methods, the UDPN will focus more on stablecoins, CBDCs, and other crypto-related assets.
Red Date Technology and partners such as tech engineering firm FGT Technologies and crypto asset creation engine TOKO believe that cryptocurrencies are expected to be the next phase of financial tools, especially with processing international remittances. With the UDPN, they aim to optimize and harness the use of digital assets for this function, making them more reliable in processing cross-border transactions.
A press release shared by the partners confirmed that several global tier-1 banks have already become involved in developing proof of concept use cases to test the UDPN in processing cross-order currency swaps and asset transfers. The release didn’t mention the banks that would be taking part in the proofs of concept, although the launch panel at the WEF included representatives from banking giants such as Standard Chartered, HSBC, and Deutsche Bank.
One of the proofs of concept reportedly targets CBDCs, exploring how commercial banking institutions within the UDPN can use CBDCs to manage, issue, and circulate a token-based CBDC. However, Red Date Technology explained on its website that this use case is more experimental than others since there aren’t many CBDCs worldwide at the moment.
China Still Leads With CBDCs Development
Conspicuously absent from the paper or any of its readings is a mention of China’s digital yuan. Regarded as the leading CBDC project in the world, the digital yuan has continued to make significant strides with regard to development and use. And considering that Red Date Technology is one of the leading partners in this CBDC project, it is quite interesting that they failed to mention it.
So far, China has continued to lead the world in CBDC development. The country’s digital yuan, which has been in production and testing for at least two years, continues to impress with its growing use cases. Last week, local news sources confirmed that the asset had gotten upgrades, including smart contract functionality and the ability to work without an active internet connection.
The new revelations came following a test using Meituan – a local internet giant in the food and ecommerce space. When Meituan users place an order and pay with the CBDC, a smart contract is triggered to search for keywords in the order. If the order matches a keyword for the asset, the user is immediately entered into a draw where they can win up to $1,300 as part of the government’s “red envelope” promo program.