Deutsche Bank and Standard Chartered’s venture arm SC Ventures are collaborating to explore a groundbreaking solution that aims to enable seamless communication across blockchain-based transactions, stablecoins, and central bank digital currencies (CBDCs).
Testing with the Universal Digital Payments Network
Their joint effort involves testing the concept using the Universal Digital Payments Network (UDPN), a permissioned blockchain system that brings together a consortium of banks, financial institutions, and consultancies operating validator nodes.
The UDPN, similar to the SWIFT messaging layer in traditional banking infrastructure, is designed to facilitate transactions across various networks. This includes transactions between stablecoins on public blockchains and CBDCs.
The creators of the UDPN, GFT Group and Red Date Technology, have emphasized the network’s ability to act as an interoperability bridge between different blockchain networks while implementing decentralized digital identity standards (DIDs) for participants. This unique approach ensures a regulated and bank-friendly environment, distinguishing it from purely permissionless networks like Bitcoin (BTC) or Ethereum (ETH).
The Benefits of the UDPN Initiative
In a recent CoinDesk report, SC Ventures’ chief technology officer, Thorsten Neumann, described the UDPN as a permissioned network that efficiently integrates with underlying permissionless networks. This integration enables cross-border currency transfers and transactions without the constraints of centralized messaging formats such as SWIFT.
The UDPN initiative currently involves approximately 25 organizations, including banks from the United States, Australia, Latin America, and Europe. These entities are actively conducting around 10 proof-of-concept tests simultaneously.
One of the key features of the UDPN is its transaction nodes, which serve as the hub for transactions connected to various currency systems and currency pools. This capability allows the system to accommodate central banks, financial institutions, and other organizations dealing with digital currencies, all within a regulated framework.
By leveraging the UDPN, Deutsche Bank, Standard Chartered, and the other participating organizations are pioneering the development of a seamless communication solution for blockchain-based transactions. This initiative has the potential to revolutionize the way digital currencies are transacted and exchanged on a global scale.
