Standard Chartered’s SC Ventures and Deutsche Bank push the payment bridge initiative, completing the first proof of concept (PoC) for the Universal Digital Payments Network (UDPN). The idea behind the initiative is similar to that of Swift where messages are used to connect payments across CBDC and blockchain networks.
The model used in the proof of concept supports only regulated tokens. This model opens up increased participation from banks. Additionally, compliance with the model is ensured via decentralized features.
UDPN is an alliance founded by Red Date Technology to tackle digital currency adoption barriers faced by current digital currency and their offerings. Some of these barriers include interoperability, exchange oversight, and regulation, the announcement release emphasized. The entity behind USDPN develops it such that organizations will participate in network governance through the UDPN Alliance.
According to the announcement, “UDPN aims to provide a decentralized identity infrastructure to enable compliance and cross-chain interoperability by exchanging messages rather than currencies. The currency transactions happen on their native blockchains or infrastructures. This means that users can swap a USDC stablecoin on one network for a Euro stablecoin on another or a bank deposit token.”
SC Ventures in the trial transferred synthetic USDC and EURS (Stasis Euro stablecoin) to Deutsche Bank wallets, and Deutsche Bank did the same. However, SC Ventures used code leveraging UDPN SDKs and APIs, while Deutsche Bank used a graphical user interface.
After the development, Deutsche Bank aims to enable its clients to actively participate and benefit from the decentralized global economy, and added that it is “the next logical step in the development of financial transactions.”
Furthermore, two other uses in the pipeline via this concept by UDPN are to enable banks to issue deposit tokens clients use or run interbank wholesale settlements. Additionally, there is the idea of a free gas transaction on a public blockchain supported by PoC.
Summarily, the use of messaging in the Universal Digital Payment Network (UDPN) for digital currencies is primarily driven by the need for interoperability and efficiency within blockchain and cryptocurrency.
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