Global banks Deutsche Bank and Standard Chartered are testing Universal Digital Payments Network (UDPN) – a groundbreaking solution that could revolutionize cross-border transactions in the realm of digital currencies.
UDPN is a permissioned blockchain system developed by tech consultancy GFT Group and Red Date Technology, co-founder of the Chinese Blockchain-Based Service Network (BSN). It is designed to facilitate seamless transactions between a wide spectrum of digital assets, including stablecoins and central bank digital currencies (CBDCs).
In a cross-border currency transfer scenario, the sending institution converts the value into a token, which is then transferred into a smart contract managed by UDPN. This smart contract releases the intended target currency without the need for a centralized messaging system such as SWIFT.
UDPN bridges disparate blockchain networks, offering an essential link that is often missing in the blockchain and digital currency ecosystem. It also applies established decentralized digital identity standards (DIDs) to participants, ensuring that transactions take place within a secure and regulated environment.
The UDPN is currently being tested by 25 participating organizations, including banks from the United States, Australia, Latin America, and Europe. These entities are actively involved in conducting ten proof-of-concept tests in order to enhance digital currency transactions.
This initiative marks another important step in the financial industry’s efforts to streamline and standardize the management of blockchain-based transactions in private settings. If successful, UDPN may provide a compelling solution for digital currencies to communicate effectively and securely, ultimately paving the way for efficient cross-border transactions.