A firm with experience constructing China’s national blockchain initiative has launched a SWIFT-style system for bank-issued and controlled digital currencies.
A Hong Kong-based blockchain firm has built a digital payments system designed to bridge the gap between stablecoins and Central Bank Digital Currencies (CBDCs).
The Universal Digital Payment Network (UDPN) was announced on January 19 during the World Economic Forum (WEF) 2023 meeting in Davos, Switzerland, by Red Date Technology, a blockchain infrastructure startup that is also leading one of China’s blockchain efforts.
GFT Technologies, a technology engineering business, and DLA Piper’s TOKO digital asset generation engine are also contributing to UDPN development.
The UDPN, according to its whitepaper, is a distributed ledger technology (DLT) platform that would function similarly to the SWIFT network for banks, but for stablecoins and CBDCs.
“The UDPN will serve the same purpose for the emerging generation of CBDCs and stablecoins as the SWIFT network did for the original single standard for messaging between financial institutions across different settlement systems.”
A “several of global tier 1 banks,” according to a Jan. 19 press release, are already engaging in use-case proof of concepts (POCs) to test the network in cross-border transfers and swaps.
The banks involved in the POCs were not disclosed in the statement, however Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia, and Akbank were represented on a panel at the UDPN launch in Davos.
The stablecoins that will be used in the POC were also kept secret. However, the network’s whitepaper states that it only accepts “controlled fiat-backed stablecoin currency systems as payment methods,” and that “no unregulated public-chain crypto-currencies, such as Bitcoin, will be allowed.”
The network has eight further proof-of-concept tests planned, including the creation and distribution of a CBDC and bank-issued stablecoin, as well as the use of UDPN as an e-commerce payment gateway.
Red Date has been working on the UDPN for about two years.
Prior to developing this digital payment system, the business was recognised for its work on China’s national blockchain initiative, Blockchain-based Service Network (BSN).
The BSN stated in a now-deleted roadmap released on Jan. 15, 2021, that it intended to develop a global CBDC system that would “totally transform the current payment and circulation mechanism, providing an uniform digital currency transfer method and payment procedure for any information system.”
The latest whitepaper makes no mention of Red Date’s tenure as the project’s leader, nor of China’s own CBDC ambitions with its digital yuan.
According to a project spokeswoman, there is “no relationship whatsoever between BSN and UDPN” because the latter is “controlled and administered in a decentralised fashion.”
Previously, Red Date CEO Yifan He dubbed cryptocurrency the “largest Ponzi scheme in human history” in June 2022.