Blockchain for Banking News

US credit unions join R3’s Digital Currency Sandbox

us dollar payments

Yesterday Bonifii, the consortium of U.S. credit unions, announced it is joining R3’s Digital Currency Sandbox.

Bonifii (formerly CULedger) uses multiple blockchain technologies and first announced it adopted R3’s Corda enterprise blockchain in 2019. 

“In 2020 we debuted CUPay, built on Corda, as a proof of concept providing a peer-to-peer financial exchange of electronic funds transfers via blockchain for domestic and international payments,” said John Ainsworth, President/CEO, Bonifii. “Participating in the R3 Sandbox for Digital Currencies will enable our community to create fit for purpose solutions which meet the evolving needs of our members.”

R3’s Digital Currency Sandbox grew out of a working group of 35 central banks created by R3 in 2020. While it was initially restricted to working group members, in December 2021, the platform went into public preview mode inviting commercial banks, financial market infrastructures, and payment and solution providers to join. The Philippines UnionBank signed up last month. 

The sandbox has been particularly active in Asia, launching a collaboration with the ASEAN Financial Innovation Network (AFIN) in June last year. AFIN is backed by Singapore’s central bank MAS and the World Bank’s International Finance Corporation (IFC). Today a new Hong Kong partnership was announced with startup community Cyberport.

Most digital currency solutions enable faster and cheaper payments, with the potential for programmable money and new business models. R3’s initial focus was on wholesale or interbank payments, but it has since expanded the sandbox to retail and cross border payments. R3 plans to extend the offering from central bank digital currencies (CBDCs) to add stablecoins, following its acquisition of IVNO last year.

As the name implies, the sandbox combines a technology platform with research and education. 

Most CBDCs will be two tiered, involving central banks distributing the digital currency through commercial banks and payment providers. At the same time, several commercial banks are also exploring settlement tokens or stablecoins, invariably mirrored by bank balances. It’s this combination that is addressed by R3’s sandbox.

But it’s not the only one out there. Citi, SETL, Digital Asset and others are exploring the Regulatory Liability Network with the concept of regulated payments and digital assets integrating with a single network. Germany’s DekaBank founded SWIAT, a shared digital asset platform. In the United States, two bank stablecoin networks are emerging, the USDF Consortium and TassatPay’s Digital Interbank Network. That’s not to mention JP Morgan’s JPM Coin and Wells Fargo’s Digital Cash, which is based on Corda.

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