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Hong Kong is set to evaluate the application of its central bank digital currency (CBDC) for cross-chain transactions utilizing Chainlink’s Cross-Chain Interoperability Protocol (CCIP), with involvement from Visa, ANZ, Fidelity, and ChinaAMC.
A report from Visa, one of the contributors to the second phase of the digital Hong Kong dollar (e-HKD) pilot initiative, indicates that the Hong Kong Monetary Authority (HKMA) will investigate the possibilities of utilizing CBDC for cross-border cross-chain transactions and interbank transfers.
As part of the e-HKD initiative, the CBDC will be assessed for payments and settlements across various blockchains, in addition to its interaction with different digital assets. Chainlink, a prominent oracle provider, will serve as the primary collaborator with HKMA in this endeavor, ensuring secure data and value transmission between public and permissioned blockchains through its CCIP.
The CCIP will facilitate the integration of DASChain, the permissioned blockchain operated by the Australian financial institution ANZ Bank, with the public Ethereum blockchain. This process will unfold in several phases:
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- Australian investors will deposit AUD and receive the stablecoin A$DC issued by ANZ.
- ANZ will issue a wrapped version of e-HKD on the DASChain network.
- Chainlink’s CCIP will securely transfer wrapped e-HKD tokens to the Ethereum blockchain.
- Investors will then be able to utilize the asset to acquire shares of tokenized funds issued by Fidelity International or China Asset Management (Hong Kong).
With Chainlink’s technology, all transactions will be subject to necessary KYC/AML verifications through CCIP’s identification modules. This strategy aims to assess the viability of ensuring secure and efficient exchanges of tokenized assets across various blockchains while maintaining oversight and regulatory adherence by financial institutions.
Another objective of the pilot is to mitigate counterparty risks through atomic settlements. The report highlights that in 2022, currency market transactions amounting to $2.2 trillion were vulnerable to risks due to inadequate settlement infrastructure. The proposed model suggests a simultaneous exchange of assets and funds between networks, potentially reducing such risks.
Furthermore, the project participants will examine how the selection of tokenization standards impacts compatibility and regulatory compliance. Two standards will be employed in this initiative: ERC-20 for e-HKD and ERC-3643 for tokenized deposits.
The authorities in Hong Kong are actively broadening the CBDC pilot initiative that commenced in 2021. In 2023, pilot programs for retail and wholesale CBDCs were initiated. In 2024, HKMA began investigating tokenization and testing cross-border payments in e-HKD. A total of 21 financial institutions are engaged in the second phase of Hong Kong’s digital currency trials.
Сообщение Hong Kong to Test CBDC for Cross-Chain Transactions Using Chainlink появились сначала на CoinsPaid Media.
