Singapore Central Bank Develops Cross-Border Payment Rail with JPMorgan

The Monetary Authority of Singapore (MAS), the country’s central bank, in collaboration with investment bank JPMorgan has developed a blockchain-based prototype for multi-currency payments.

According to an official release on Monday, MAS stated that the latest development for its Project Ubin allows for payments to be executed in different currencies on the same network, enabling cross-border payments. This is the fifth phase of the project, which was developed in collaboration with JP Morgan and Temasek – a government-owned investment company.

Started as a collaborative project to test the viability of blockchain and distributed ledger technology, MAS states that the novel implementation is bringing cost and speed benefits.

“There is growing evidence now that blockchain-based payments networks are able to enhance cost efficiencies and create new opportunities for businesses,” said Sopnendu Mohanty, chief fintech officer of MAS.

In its fifth phase, the prototype developed allows for payments settlement and clearing with different currencies. The payments network will also provide an interface for other blockchains to connect and will support delivery-versus-payment (DvP) settlement with private exchanes, conditional payments, escrow as well as payments commitments for trade finance.

Beyond technical experimentation, the fifth phase of Project Ubin sought to determine the commercial viability and value of the blockchain-based payments network. Until now, MAS and its partners have engaged more than 40 financial and commercial companies to explore the potential benefits of the blockchain-based network.

“The inclusion of non-financial services companies has demonstrated applicability of blockchain technology beyond capital markets and trade finance. We look forward to deeper collaboration and support for Singapore’s pioneering efforts in the blockchain space,” stated Chia Song Hwee, Chief Operating Officer at Temasek.

Investment bank JP Morgan, part of project Ubin, acts as the infrastructure provider for the prototype’s development. The banking giant has tipped its toes in the blockchain industry with various initiatives, including the inter-bank settlement network with its own stablecoin JPM Coin.

“J.P. Morgan is excited to be an infrastructure partner of MAS and Temasek for Phase 5 of Project Ubin. By leveraging our key learnings from building the Interbank Information Network® (IIN) and the JPM Coin, J.P. Morgan is well-positioned to support the development of a blockchain-based payments network and operate at scale.” John Hunter, Global Head of Clearing and Interbank Information Network.

Consultancy firm Accenture is set to publish a detailed report with the results of the prototype by early 2020, which will also indicate additional features that could be provided by the network.

Singapore officials hope that the success of their trial will motivate other central banks to explore blockchain-based settlement networks as well. Recently, People’s Bank of China (PBoC) revealed the development of its own digital currency, while the European Union is considering the issuance of a digital Euro.

Standard Chartered Joins Other Banking Giants at Enterprise Ethereum Alliance

British multinational banking giant Standard Chartered, with over $685 billion in total assets, has just announced its partnership with Enterprise Ethereum Alliance – a member-operated organization that works in the development of blockchain technology for consumers and businesses across the globe.

According to a post on the official website, Standard Chartered announced the partnership with EEA, stating that its main goal is to further develop blockchain technology research and its application in the banking sector. In addition to that, the EEA’s charter has indicated that its intent is to develop open blockchain frameworks to push interoperability between businesses and consumers.

Following the announcement, Standard Chartered joins other industry leaders, which are members of the EEA that wish to strengthen blockchain research and its application in the banking sector. Other banking giants include JP Morgan, ING, Citi, and Spanish bank BBVA. The alliance comprises of around 100 other members, all working towards encouraging the use of Ethereum blockchain as an open-standard to empower enterprises.

The post further reads that the bank strongly believes blockchain to be the best way for central banking and commerce as it would allow transactions to be verified, secure, and processed in real-time. Upon the announcement, Dr. Michael Gorriz – Chief Information Officer at Standard Chartered – stated:

“We are excited to be a part of the EEA and look forward to opportunities where we can collaborate to deepen blockchain research and application in the banking sector.”

Certainly, this is not Standard Chartered’s first venture into blockchain technology. The post has cited a lot of global collaboration projects with fintech firms to explore financial systems’ efficiency improvements, build blockchain-enabled financing solutions for supply chain, and assist cross-border remittance services between Hong Kong and the Philippines using blockchain technology.

The bank is a founding member of the blockchain- based trading platform Voltron and has also recently completed its first international letter of credit (LC) transaction on the platform for the oil industry.

The British bank has also invested in blockchain payments firm Ripple and is currently working with China-based Linklogis to develop a blockchain-based supply chain financing solutions. In addition to that, the bank is currently working with the Central Bank of Thailand to aid them in creating a CBDC, as well as backing the Monetary Authority of Singapore’ s initiative to explore DLT use for payment settlements.

New Blockchain Alliance for International Trade and Financing with Shanghai Authorities

Local Shanghai government has partnered up with financial institutions to establish an alliance in Shanghai’s E-port area to boost the use of blockchain for global trade.

At the China International Import Expo, which took place today on November 7th, the Shanghai Municipal Commission of Commerce, Shanghai Customs, and representatives of 6 bank branches in the city — including the People’s Bank of China and Bank of Communications — have collectively signed an E-port blockchain alliance.

According to the announcement, this new alliance aims to make use of blockchain technology to help the city with its international trade. Prior to this, Chinese President has taken a strong stance for the blockchain technology and urged the country to take the lead role in the industry.

Chen Huifang, professor at the College of Information Science and Electronic Engineering of Zheijiang University, noted that decentralized and distributed accounting features, that promotes information sharing, will ultimately facilitate international as it will help improve the efficiency of customs clearance as well as reduce the cost.

Ye Jian – an official from the General Administration of Customs of Shanghai –  noted that the alliance serves as another move under China’s vow to optimize ist business environment.

“This is the first blockchain application project in customs and the first service project for the CIIE. China upholds multilateral trade and constantly improves its business environment by seeking technological innovation,” said Ye.

Shen Weihua, deputy director of the Shanghai Municipal Commission of Commerce, explained that blockchain technology has already been applied to several business areas that are involved in Shanghai’s international trade, which include digital insurance, digital supply chain, Internet of Things (IoT), and intelligent manufacturing.

He further added that blockchain technology has been successfully implemented in the newly launched cross-border yuan trade financing services for Shanghai’s single window system. The application helped solve information imbalance issues during the process of trade financing.

According to him, the city’s “single window” services platform integrates to date 10 major functions, with 22 departments covering all regulations and major procedures in international trade.

Previous reports show that a pilot blockchain system was also trialed for cross-border financial services in Nanning, South China’s Guangxi Zhuang Autonomous Region, this October.

Qi Hong, vice director of China Construction Bank’s Shanghai branch, emphasized to reporters that the technology remains in its early experimental phase in the country, outlining that:

“We now use blockchain in sporadic financial products instead of the whole finance industry chain, and the public doesn’t have a sound understanding of the technology when it comes to financing. But I think the government’s call for blockchain construction will help push the technology’s application in a more comprehensive way.” 

Meanwhile, China’s President Xi Jinping has recently stated that the adoption of integrated blockchain technologies is pivotal to promoting tech innovation and industry transformation in the country. He urged the country to accelerate blockchain adoption and assume the role of leadership in the industry.

Several from the crypto industry speculated that it was the President’s speech that triggered the spike in the price of Bitcoin (BTC). Currently, The People’s Bank of China is working on launching the first official digital currency soon.

China’s Central Bank Will Start Certifying Blockchain Platforms

The People’s Bank of China – the country’s central bank – has announced the launch of a new process for certifying blockchain platforms.

The new verification system, named the ‘Certification of Fintech Products’,  will certify 11 types of financial technology hardware and software that are widely used for digital payment and blockchain services.

On October 26th, the central bank released the first list which includes fintech products that could be used in both front-end and bank-end development for digital payment services. Currently, the new certification system covers all the products that could be involved in digital payment technologies, including point-of-sale mobile terminals, embedded application software, user front-end software, as well as security carriers and chips.

Notably, a specific fintech item included on the list of 11 products is trusted execution environment (TEE), which is a technology that can assist in the establishment of a “consortium blockchain network and verifying blockchain transactions in financial transactions use cases,” according to the filing.

For reference, giant tech company Microsoft filed for two patents in August 2018 to use similar type of technologies with the goal to improve the security and capacity of its blockchain services offerings.

Furthermore, blockchain platforms will be granted a Certification of Fintech Product (CFP) by the central bank only if their products meet the required checks to pass such as prototype examination and on-site checks. In addition to that, the certificate will be reviewed and renewed every three years.

Respectively, during the three year period, the authorities in charge will conduct random inspections on any step of the production process to ensure compliance. Additionally, institutions will be allowed to stamp the certifications on their logo. However, it is not allowed to use the certification as a means to directly promote products or for advertising itself.

The news follows China’s recent praise of blockchain and cryptocurrencies as a whole, with the President Xi Jinping urging the country to accelerate blockchain adoption, noting that it can and will be a big part of any upcoming technical revolutions.

 “[Blockchain will play] an important role in the next round of technological innovation and industrial transformation. Greater effort should be made to strengthen basic research and boost innovation capacity to help China gain an edge in the theoretical, innovative, and industrial aspects of this emerging field,” stated President Xi Jinping.

The central bank is currently working on developing the country’s own digital currency, which will launch soon. The bank forsees the national digital currency boosting the digital payment industry, touting its own coin’s security features and off-line transaction ability as superior to commercial products offered by China’s Alipay and WeChat Pay.

Libra Marches on Following the Association’s First Member Meeting

The Libra Association – a consortium of companies who governs over Facebook’s proposed stablecoin Libra – held its first meeting on Monday in Geneva, Switzerland.

Following the meeting in Geneva, the twenty-one organizations formally signed the Libra Association charter as well as named its board of directors and formalized the consortium’s executive team.

As such, the five-member board is comprised of Calibra cofounder David Marcus, Andreessen Horowitz general partner Katie Haun, Xapo CEO Wences Cesares, PayU general counsel Patrick Ellis, and Kiva chief strategy officer Matthew Davie. PayPal veterans Bertrand Perez, Dante Disaprte, and Kurt Hemecker will comprise the Association’s executive team.

Most major decisions will require a majority vote of the ruling council, whilst proposed changes to membership or management of the reserve must pass by a two-thirds majority.

In addition to Calibra, the association consists of Coinbase, Xapo, Anchorage, Bison Trails, Creative Destruction Lab, Andreessen Horowitz, Thrive Capital, Ribbit Capital, Union Square Ventures, Breakthrough Initiatives, Illiad, Vodafone, Farfetch, Uber, Lyft, Kiva, Mercy Corps, Women’s World Banking, Spotify and PayU, according to a press release.

The news follows a string of significant departures of major companies such as Visa, PayPal, MasterCard, Stripe, eBay and Booking from the Facebook-led stablecoin project. Most announced their withdrawals from Libra citing concerns over the regulatory backlash faced by the project.

Still, according to the Libra Association more than 1,500 institutions have expressed interest in joining the project, with 180 meeting the organization’s membership criteria. In June, Facebook claimed a consortium of 100 companies would back the cryptocurrency project at launch.

However, the association shared no updates regarding those plans nor the exact launch date. Although Facebook initially targeted an early 2020 launch date, recent statements by CEO Zuckerberg have put this timeline into doubt.

Meanwhile, financial regulators around the globe have expressed their opposition to the project, citing fears that Libra could destabilize the global monetary order. Ministers in France and Germany stated they were against Libra and India announced that Libra may not even be legal in the country. Most recently, U.S. Rep. Maxine Waters (D-Calif.) called for a moratorium on the project until all regulatory questions could be cleared.

However, Calibra’s Marcus has claimed that these fears are misplaced. He recently testified before the U.S. Congress, trying to dispel the concerns of both the Senate Banking Committee and the House Financial Services Committee.  Mark Zuckerberg is also slated to testify about the project before the House of Representatives Financial Services Committee.

Despite regulatory backlash, the Libra Association remains optimistic about going forth with the project. Dante Disparte, the head of policy and communications at Libra Association, stated that the recent flight of major backers is “a correction; it’s not a setback.” Nonetheless, he admitted that any delay to the launch will be a result of its regulatory issues, rather than technical concerns.