Davos Forum, a Chinese company announces a blockchain project to become the “SWIFT” of stablecoins

Annual Davos World Economic Forum

A SWIFT-like system for cryptocurrencies issued and regulated by banks was announced at the annual forum in Davos. The initiative comes from a company participating in the construction of the national blockchain project in China.

In effect, a Hong Kong-based blockchain company launched a digital payments system aimed at bridging the gap between stablecoins and central bank cryptos (CBDC).

Presentation of the universal digital payment network project

It is this January 19, 2023 that Red Date Technology, the blockchain infrastructure company that also leads one of China’s blockchain projects, has launched the Universal Digital Payments Network (UDPN). The announcement was made during the 2023 World Economic Forum (WEF) meeting in Davos, Switzerland.

this UDPN development project will be supported by many other partners. Among these may be mentioned the technological engineering company GFT Technologies and law firm DLA Piper’s TOKO digital asset creation engine.

An alternative to the SWIFT network

According to its white paperthe UDPN is a Distributed Ledger Technology (DLT) platform that would serve a purpose similar to what the SWIFT network made for banks, but it will only be valid for stablecoins and CBDCs.

“Like the rSWIFT network created the original common standard for messaging between financial institutions across different settlement systems, the UDPN will serve the same purpose for the emerging generation of CBDCs and stablecoins.”

The SWIFT network (Society for Worldwide Interbank Financial Telecommunication) is the most widely used payment system in the world for transferring funds between different banks. The use of stablecoins will somehow bypass this network.

Representation of the main stablecoins

Therefore, the objective of this project will be to facilitate or even optimize the transactions between companies from different countries via stablecoins and cryptos regulated by central banks.

According to a press release published on January 19, there are a “number of Tier 1 banks” that are already involved in use cases of proof of concept (POC) to test this new platform in cross-border transfers and exchanges.

Even if the press release does not specify which banks are currently participating in these POCs, it is noted that the Deutsche BankHSBC, Standard Chartered, The Bank of East Asia and Akbank were represented on a panel at the UDPN launch in Davos.

Likewise, the stablecoins that will be used in the POC have also not been disclosed. However, the platform’s white paper states that it only supports “CBDC and stable monetary systems backed by regulated fiat currencies as methods of payment”,

Also in this white paper, we can read:

No unregulated public cryptocurrencies, such as bitcoin, will be accepted.”
Eight more proof-of-concept tests are planned for the network, including issuing and circulating a CBDC and a bank-issued stablecoin and using UDPN as a payment gateway for e-commerce.

The UDPN is under development by Red Date for nearly two years,

China’s distrust of this new platform

Before throwing this digital payments systemthe company was known for its work on the Blockchain-Based Services Network ((BSN-DDC), China’s national blockchain project.

But Beijing has shown its distrust of the project, because it could encourage capital flight. The use of stablecoins is also prohibited in China, as they are considered a threat to the country’s financial stability.

However, Pékin has long sought to circumvent the SWIFT network and also launched a competing system in 2015. China’s arguments are that it fears the SWIFT network will become a weapon that could act as leverage for Western governments. This was also observed in the case of Russia, which was excluded from the network after its invasion of Ukraine.

Thus, in a now-deleted roadmap published on January 15, 2021, the BSN indicated that it planned to build a global CBDC system which “will completely change the current method of payment and circulation. This new system will enable a standardized digital currency transfer method and payment procedure for any information system.”

The latest published white paper makes no mention of Red Date’s involvement in piloting the China’s blockchain project. Also, this company’s involvement is not mentioned in the country’s own CBDC efforts with its digital yuan.

A spokesperson for the project told Cointelegraph that there was “no connection whatsoever between BSN and UDPN“, the reason being that the latter is “decentrally managed and governed.”

In June, the CEO of Red DateYifan He, called cryptocurrencies “the biggest Ponzi scheme in human history.”

Davos Forum, a Chinese company announces a blockchain project to become the “SWIFT” of stablecoins