A SWIFT-style network for bank-issued and regulated digital currencies was unleashed by a company with a tenure building China’s national blockchain project.
A Hong Kong-based blockchain firm has launched a digital payments system aimed at bridging the gap between central bank digital currencies (CBDCs) and stablecoins.
The blockchain infrastructure company, Red Date Technology, which is also leading one of China’s blockchain efforts, launched the Universal Digital Payment Network (UDPN) on January 19 during the World Economic Forum (WEF) 2023 meeting in Davos, Switzerland.
Tech engineering firm GFT Technologies together with the digital asset creation engine TOKO from law company DLA Piper are also contributors to UDPN development.
Based on its whitepaper, the UDPN is a distributed ledger technology (DLT) platform that would mainly serve a similar purpose to what the SWIFT network does for banks, but 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 emerging generation of CBDCs and stablecoins.”
Based on a January 19 press release, a “number of global tier 1 banks” are already getting involved in use-case proof of concepts (POCs) aiming to test the network in cross-border transfers and swaps.
The release did not reveal what banks were participating in the POCs, but Standard Chartered, The Bank of East Asia, Deutsche Bank, HSBC, and Akbank were represented on the panel at the UDPN launch in Davos.
The stablecoins to be used in the POC were also undisclosed. The networks whitepaper does say, nevertheless, that it just supports “CBDCs and regulated fiat-backed stablecoin currency systems as payment methods,” adding:
“No unregulated public-chain crypto-currencies, such as Bitcoin, will be accepted.”
Eight of the other proof-of-concept tests are scheduled for the network, including issuing and circulating a CBDC and bank-issued stablecoin and utilizing UDPN as a payment gateway for e-commerce.
The UDPN has been in development by Red Date for almost two years.
Before launching digital payments, the firm was known for its work on Blockchain-based Service Networks (BSN), China’s national blockchain project.
In the now-deleted roadmap posted on January 15, 2021, the BSN stated that it planned to develop a global CBDC network that:
“Will completely change the current payment and circulation method, enabling a standardized digital currency transfer method and payment procedure for any information system.”
The latest whitepaper does not mention Red Date’s tenure in steering China’s blockchain project, nor of the nation’s own CBDC efforts with its digital yuan.
One spokesperson for the project said that there is “no connection whatsoever between BSN and UDPN” since the latter is “managed and governed in a decentralized manner.”
Previously, in June 2022 Red Date’s CEO, Yifan He, referred to cryptos as the “biggest Ponzi scheme in human history.”