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Mastercard and Standard Chartered Conduct First Live Test of Tokenized Deposits

ByDayne Lee

May 18, 2024

Mastercard and Standard Chartered Conduct First Live Test of Tokenized Deposits

In a significant advancement in financial technology, Mastercard and Standard Chartered Bank Hong Kong (SCBHK) have successfully completed the first live test of Mastercard’s Multi-Token Network (MTN). This test was conducted within the supportive environment of the Hong Kong Monetary Authority (HKMA) Fintech Supervisory Sandbox, marking a pivotal moment in the use of blockchain technology for financial applications.

The Pilot Project

The pilot project involved a client from SCBHK’s virtual bank, Mox Bank, who initiated a transaction to purchase a carbon credit. The process began with the client depositing funds into their Mox account. Following this, Mox Bank coordinated with SCBHK to request the tokenization of the carbon credit through Libeara, a tokenization service provider launched by Standard Chartered’s venture arm, SC Ventures.

The core of the project was the implementation of Mastercard’s MTN to tokenize the deposit, followed by an atomic swap—a real-time exchange that occurs across different blockchains—between the tokenized deposit and the carbon credit.

Mastercard’s Multi-Token Network

Launched in June 2023, the MTN operates on Mastercard’s proprietary blockchain platform. Prior to this pilot, the MTN was tested in collaboration with the Reserve Bank of Australia and the HKMA, focusing on wrapped central bank digital currencies (CBDCs) like e-HKD, though these CBDCs have yet to be fully implemented.

Helena Chen, Mastercard’s managing director for Hong Kong and Macau, emphasized the company’s commitment to supporting Hong Kong’s development as a premier digital assets hub. This commitment aligns with the HKMA’s efforts to foster fintech innovation and promote the growth of the tokenization market in the region.

Regulatory Environment and Other Initiatives

The HKMA has been actively encouraging local banks to enhance services related to cryptocurrency exchanges. SCBHK’s involvement extends beyond this pilot to include participation in the HKMA’s Project Ensemble and its e-HKD pilot program, as well as the international Project mBridge.

Additionally, Standard Chartered has engaged in various global initiatives, including projects with SWIFT on CBDC usage and with U.K. Finance on the Regulated Liability Network. In November, SC Ventures established a crypto fund in the United Arab Emirates, further diversifying its digital asset engagements.

Other financial institutions in Hong Kong, such as HSBC and China’s Ant Group, have also been exploring blockchain applications. HSBC recently tested tokenized deposit transactions within an HKMA sandbox using Ant Group’s blockchain technology and has begun offering trading services for Bitcoin and Ethereum futures ETFs in Hong Kong.

This pilot by Mastercard and SCBHK represents a significant step forward in the practical application of blockchain technology for secure, efficient financial transactions. By enabling the tokenization of assets like carbon credits, Mastercard’s MTN provides a robust platform that could revolutionize financial markets, enhance transparency, and offer new investment opportunities. As regulatory frameworks evolve, such innovations could pave the way for broader adoption of blockchain technology in mainstream financial services.

Featured image credit: Kelvin Munene Murithi via Coingape

Dayne Lee

With a foundation in financial day trading, I transitioned to my current role as an editor, where I prioritize accuracy and reader engagement in our content. I excel in collaborating with writers to ensure top-quality news coverage. This shift from finance to journalism has been both challenging and rewarding, driving my commitment to editorial excellence.

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