Blockchain for Banking News

UDPN opens digital currency sandbox for commercial, central banks

UDPN digital currency sandbox

The Universal Digital Payments Network (UDPN), a fiat digital currency interoperability solution, announced the launch of sandboxes targeted at commercial and central banks. UDPN aims to support interoperability between digital currencies, including stablecoins, tokenized deposits and central bank digital currencies (CBDCs). 

It provides a decentralized Swift-like messaging system that uses blockchain and smart contracts to enable interoperability. The UDPN was founded by Red Date Technology, the company that co-founded China’s Blockchain Based Service Network (BSN) alongside government owned firms and departments. For the UDPN it partnered German headquartered consultancy GFT and Toko, a tokenization spin off of law firm DLA Piper.

Some big names have participated in UDPN proofs of concept so far, including Standard Chartered and Deutsche Bank.

The digital currency sandbox

The sandbox supports the types of currencies already mentioned, including both retail and wholesale CBDC as well as purpose bound money. Several stablecoins are integrated with UDPN, such as PayPal USD, Paxos Dollar, USDC and Tether.

On the retail CBDC front, the sandbox allows commercial banks to trial how a retail CBDC system might work, including quota management, circulation and wallets. We assume this is testing the G+D Filia solution as Giesecke & Devrient has integrated its solution with UDPN. 

When the UDPN first launched its whitepaper, it said it wouldn’t charge users initially, but its business model is based on transfer and swap fees. However, participation in the sandbox isn’t free, with monthly charges starting at $15,000 for banks and $20,000 for central banks.

At the same time, UDPN has launched a wholesale cross border CBDC proof of concept (PoC), Project Kissen, one of a dozen PoCs. UDPN says its aims to tackle payment and foreign exchange costs while also promoting the adoption of digital currencies.

Meanwhile, GFT is increasingly the public face of the UDPN. Last November, the international BSN Spartan Network co-founded by Red Date was the subject of a U.S. government ban proposed in a Bill.

Image Copyright: UDPN