Mastercard and Standard Chartered Bank have completed their first live test of tokenized deposits using the Mastercard Multi-Token Network.
Mastercard and Standard Chartered Bank Hong Kong (SCBHK) have successfully completed their first live experiment on the execution of tokenized deposits using the Mastercard Multi-Token Network (MTN).
The experiment took place in Hong Kong. The purpose of this project was to investigate the potential applications of blockchain technology in the banking industry.
Mastercard Multi-Token Network in Action
The supervisor oversaw the work in the Hong Kong Fintech Supervisory Sandbox. We conducted the investigation on a customer of Mox Bank, a digital bank under Standard Chartered’s umbrella, who purchased a carbon credit.
This asset was tokenized by SCBHK upon Mox Bank’s request. To achieve tokenization, SC Ventures, Standard Chartered’s innovation arm, built Libeara, a tokenization platform.
They conducted the transaction through Mastercard’s MTN, resulting in an atomic swap between the tokenized deposit and the carbon credit upon transaction completion.
Therefore, during the transaction, they delivered the tokenized asset to the client’s digital wallet. As stated by Helena Chen, who serves as the Managing Director of Mastercard for Hong Kong and Macau, this test is part of the wider trend of incorporating blockchain technology into financial institutions.
“Mastercard is delighted to join forces with SCBHK, Mox, and Libeara to create applications that will change the way consumers and businesses transact.”
Broader Implications for Financial Technology
The Hong Kong Monetary Authority (HKMA) has undertaken Project Ensemble as a forward-looking initiative to investigate tokenized deposits and wholesale Central Bank digital currencies (CBDCs).
Furthermore, this initiative is in keeping with the global trend of digital currency, which is the case with Standard Chartered’s involvement in other significant projects such as the multi-CBDC cross-border payment platform, mBridge, and the eHKD CBDC trials.
This initiative is also in line with the international trend toward digital currency. This means that the successful completion of this test could lay the groundwork for the widespread adoption of tokenized assets and digital currencies leading to a transformation in the way we conduct banking transactions.
According to Mary Huen, the Chief Executive Officer of Standard Chartered Hong Kong, the financial industry is paying close attention to these changes because they might be the beginning of a new era in financial transactions that is characterized by an increase in the efficiency, transparency and safety of the transactions.
“Under the leadership of the HKMA, we are the first to carry out this project and to be the catalyst for the use of tokenization in financial assets. “
Furthermore, we anticipate that additional reports and analyses on tokenized deposits and stablecoins issued by banks will reveal potential shifts in the business.
In addition, other financial institutions and IT heavyweights are also investigating the same blockchain applications, which is evidence that digitalization and tokenization are becoming increasingly prevalent in the financial sector.