A Universal Digital Payments Network (UDPN) for stablecoins and Central Bank Digital Currencies (CBDCs) was launched at the World Economic Forum (WEF) in Davos. The network is already testing a set of 10 proof-of-concept use cases in the UDPN sandbox environment.
Launched at Davos during the World Economic Forum week, „the Universal Digital Payments Network (UDPN) is a DLT-underpinned messaging backbone focused on providing interoperability between the fast-growing number of different regulated stablecoins and CBDCs, and seamless connectivity between any business IT system and regulated digital currencies” – according to the press release.
At the Davos launch event, representatives from leading global financial institutions Deutsche Bank, HSBC, Standard Chartered, The Bank of East Asia, and Akbank discussed the rapidly evolving world of digital currency, the importance of interoperability, and the need for an infrastructure to support these developments. The UDPN has the potential to drive down the cost of digital payments and accelerate adoption by banks and businesses of all sizes.
Nearly two years into development, the UDPN is an advanced digital currency payments project that has achieved several significant milestones to date, including the launch of a UDPN Sandbox in July last year, in which multiple banks have been actively testing stablecoin transfer and swap (FX) transactions.
A number of global Tier 1 banks will participate in a series of Use Case POCs this month which will demonstrate how the UDPN will solve the current and future challenges of integrating digital currency into daily business, banking, and payment scenarios. The first two POCs will involve two global banks testing UDPN’s digital currency cross-border transfer and swap transaction capabilities, and also how the critical “Travel Rule” can be easily implemented on the UDPN between two financial institutions for anonymous stablecoin transfers.
The future of money is digital, regulated and interoperable. It is widely recognised that much of today’s payments infrastructure is analogue, fragmented and expensive. Digital money will make cross-border transactions simpler, cheaper and faster, and is expected to become increasingly integrated within the regulated financial system as its use grows in consumer and wholesale payments.
Proof-of-concept use cases
To boost awareness of the power and almost limitless capabilities of e-money, namely regulated stablecoins and CBDCs, the UDPN is building and testing a set of 10 proof-of-concept use cases in the UDPN sandbox environment. The testing of the use cases, to be completed in the six months ending June 2023, will allow participants to experience what’s possible with e-money and demonstrate how these digital currencies and their related ecosystems will function.
UDPN Use Case #1: Digital Currency Transfer and Swap – This use case demonstrates how a bank can link its customers’ bank accounts with their stablecoin wallets.
UDPN Use Case #2: Implementing the „Travel Rule” – The “Travel Rule” requires that two financial institutions involved in a digital currency transaction (KYC-based or anonymous) have “obligations to obtain, hold, and transmit required originator and beneficiary information in order to identify and report suspicious transactions, monitor the availability of information, take freezing actions”. This use case demonstrates how two banks can exchange originator and beneficiary information during a linked anonymous stablecoin transfer or swap when the two parties belong to two different banks on the UDPN network.
UDPN Use Case #3: Bank-issued Stablecoin – This use case demonstrates how a bank can issue a stablecoin on the UDPN Network.
UDPN Use Case #4: Purchasing Digital Currencies with Fiat Money – This use case demonstrates how a money service provider (payment service or bank) can convert fiat money via bank transfer, credit card, or even cash to digital currencies (regulated stablecoins or future CBDCs) supported by UDPN.
UDPN Use Case #5: Digital Currency Payment Gateway for E-Commerce – This use case demonstrates how an online business can use UDPN-integrated digital currencies as one of its payment methods on their website or mobile app by simply installing a UDPN Business Node locally and accessing its related APIs.
UDPN Use Case #6: Enabling Gasless Transactions Using Public Chain-based Stablecoins – This use case demonstrates how a business can allow its customers to make payments in public chain-based regulated stablecoins, using the UDPN infrastructure, without holding and using the public chains’ native cryptocurrencies.
UDPN Use Case #7: Cross-Institution KYC Verification – This use case demonstrates how two businesses (or banks or governments) can verify each other’s KYC-based customers’ identities by leveraging UDPN infrastructure and its DID architecture.
UDPN Use Case #8: Digital Asset Tokenization – This use case demonstrates how an asset can be tokenized on the UDPN network through a set of tokenization smart contracts handling insurance, underwriting, compliance, trading, settlement, and recovery of the full circle of the tokenization process.
UDPN Use Case #9: Facilitating Foreign Exchange on Digital Currencies – As the number of regulated stablecoins (especially those that are not pegged to the US dollar) and CBDCs supported by the UDPN grows, a foreign exchange (FX) mechanism will be built to better facilitate swap transactions performed by the network.
UDPN Use Case #10: Central Bank Digital Currency Issuing and Circulation – This use case demonstrates how two commercial banks using UDPN infrastructure can manage, issue, and circulate a token-based central bank digital currency as issuing banks for each of the three different CBDC operating models under a central bank (direct, indirect and hybrid models).
“The purpose of UDPN is to investigate a potential alternative to existing payments systems by enabling interoperability between fiat-backed tokens of stablecoins and regulated protocols,” said Marika Lulay, CEO of GFT. “The decentralised approach and geographic breadth of participating firms, combined with the advanced technological solution deployed for these trials, set this network apart.”
The network was developed with contributions from global IT engineering and solutions provider GFT, decentralised cloud infrastructure company Red Date Technology, and TOKO, the digital asset creation engine delivered in collaboration with DLA Piper.
UDPN is a global messaging network supporting government-regulated digital currency systems, including regulated stablecoins and Central Bank Digital Currencies (CBDCs). The UDPN promotes financial inclusion by allowing enterprises around the world to connect directly with the centralised and decentralised digital currency systems of the future.
The UDPN also serves as a distribution network to bring digital currencies to all enterprise IT systems , no matter how small or large, enabling the transfer and swap of different currencies. The UDPN is a permissioned, decentralised network managed via a decentralised governance model consisting of 8 to 24 alliance members, preventing any single entity from controlling the network.
Parties interested in exploring the UDPN Sandbox, participating in further proof-of-concept projects using the UDPN, or potential participation in the UDPN Alliance itself are invited to visit the UDPN official website at https://www.udpn.io or contact us at email@example.com .
Banking 4.0 – „how was the experience for you”
„So many people are coming here to Bucharest, people that I see and interact on linkedin and now I get the change to meet them in person. It was like being to the Football World Cup but this was the World Cup on linkedin in payments and open banking.”
Many more interesting quotes in the video below: