Crypto Innovations: Deutsche Bank and Standard Chartered Testing Universal Digital Payments Network for Interoperable Transactions

Crypto Innovations: Deutsche Bank and Standard Chartered Testing Universal Digital Payments Network for Interoperable Transactions

Crypto News – Deutsche Bank and Standard Chartered’s SC Ventures are currently conducting tests on a groundbreaking system known as the Universal Digital Payments Network (UDPN). This system is designed to facilitate seamless transactions, connecting various digital assets, including stablecoins on public blockchains and central bank digital currencies (CBDCs). The approach being employed is reminiscent of the SWIFT messaging layer used in traditional banking infrastructure.

UDPN is based on a permissioned blockchain system, consisting of validator nodes operated by a consortium of banks, financial institutions, and consulting firms. It’s a collaborative effort between tech consultancy GFT Group and Red Date Technology, the co-founder of the Chinese Blockchain-Based Service Network (BSN). This network not only instructs and enables transactions but also ensures compatibility across a wide range of networks, from public blockchain-based stablecoins to CBDCs.

In the world of cryptocurrencies, it’s not uncommon for banks and institutions to come together in consortia to find the best way to manage blockchain-based transactions in private settings. Despite some initial hype, these enterprise blockchains have so far generated limited interest.

Digital currencies serve both as the medium and the message, raising questions about the need to run systems like SWIFT messages in parallel. According to its creators, UDPN serves as an interoperability bridge between different blockchain networks while also adhering to established decentralized digital identity standards (DIDs). This approach creates a bank-friendly and regulated environment.

Thorsten Neumann, CTO of SC Ventures, explained, “The UDPN is a network with permissioned member affiliations. What sets it apart is that transactions themselves are executed on the underlying infrastructure, which includes permissionless networks.” For example, in a cross-border currency transfer, the sending institution transfers tokenized value into a smart contract managed by UDPN, which then releases the intended target currency from that smart contract. Neumann highlighted that this process resembles decentralized finance (DeFi) capabilities within a permissioned network and operates without the need for a central organization to establish formats like SWIFT messages.

The UDPN currently involves approximately 25 organizations conducting around 10 proof-of-concept tests in parallel. This group includes banks from the USA, Australia, Latin America, and Europe.