A new crypto payments ecosystem for stablecoins and CBDCs called Universal Digital Payments Network (UDPN) debuted at Davos.
Some are comparing the project to the antiquated SWIFT network. The difference is that it is designed to make stablecoins and central bank digital currencies (CBDCs) interoperable.
It could also be considered a Ripple competitor. However, the firm works with private financial institutions rather than central banks.
The Chinese company behind it also develops the state Blockchain-based Service Network (BSN). This means it will likely be heavily controlled by the Chinese Communist Party (CCP). However, the white paper did not mention China’s eCNY (digital yuan) CBDC.
Connecting State CBDCs and Stablecoins
Red Date Technology unveiled the system late last week at the World Economic Forum in Davos, Switzerland.
According to the white paper, it aims to allow enterprises from different countries to “transact and settle in different regulated digital currencies.”
The firm explained:
“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 emerging generation of CBDCs and stablecoins,”
Furthermore, the UDPN will not work with decentralized cryptocurrencies. “No unregulated public-chain cryptocurrencies, such as Bitcoin, will be accepted,” it stated.
The firm stated that several leading banks would participate in a series of proof-of-concept trials from January to June. These could include Deutsche Bank, HSBC, Standard Chartered, and the Bank of East Asia since they attended the UDPN launch event.
Red Date intends for them to explore how two commercial banks can “manage, issue, and circulate a token-based central bank digital currency,” using the UDPN system.
Beijing is highly unlikely to approve of anything that contributes to capital flight. It has banned the use of stablecoins and cryptocurrencies within its borders for that reason.
Ecosystem Outlook
Despite China’s constant crackdowns, the stablecoin ecosystem continues to grow globally.
Major stablecoin issues have begun minting them again amid an uptick in demand. There is currently a total market cap of $137.8 billion for stablecoins. Furthermore, this represents around 13% of the total crypto market cap.
The supplies of Tether (USDT), Circle (USDC), and MakerDAO’s DAI have all increased slightly over the past week or two. Binance USD (BUSD) has seen a slight decline.
Disclaimer
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.
Source: https://beincrypto.com/chinese-cross-border-payments-system-for-stablecoins-and-cbdcs-unveiled-at-davos/