Chainlink and Visa Pioneer Cross-Border Digital Finance in Hong Kong
Chainlink has achieved a significant milestone in cross-border digital finance by participating in Phase 2 of the e-HKD+ Pilot Programme, a project spearheaded by the Hong Kong Monetary Authority. This initiative showcased how Australian investors could seamlessly invest in Hong Kong’s financial markets using digital currencies.
Key Highlights of the Pilot Programme:
- Real-time Access for Investors: The pilot facilitated Australian investors’ access to Hong Kong funds, significantly reducing delays and risks traditionally associated with cross-border transactions.
- Global Influence: The insights gained from this trial are set to guide international standards for Central Bank Digital Currencies (CBDCs) and tokenised financial systems, in light of the growing acceptance of digital assets.
The trial specifically simulated an exchange between Australia’s A$DC stablecoin and Hong Kong’s prototype CBDC. In collaboration with institutions like ANZ, Fidelity International, and ChinaAMC, Chainlink’s Cross-Chain Interoperability Protocol (CCIP) played a crucial role by linking ANZ’s private DASChain and Ethereum’s public testnet. This integration allowed for near-instant asset settlement, effectively reducing the risks posed by conventional cross-border transactions.
In this trial, Australian investors experimented with using A$DC or tokenised deposits to acquire units of tokenised money market funds (MMFs) offered by Hong Kong asset managers via the e-HKD. This new approach demonstrated a significant potential to eliminate intermediaries, drastically shorten settlement times from days to mere seconds, and enhance both transparency and operational efficiency.
Source: Chainlink
Advances Enabled by Smart Infrastructure
The integration of Visa’s Tokenised Asset Platform (VTAP) allowed for the efficient creation and transfer of digital currencies, providing for nearly instantaneous payment and settlement processes using smart contracts. Chainlink further enhanced these operations by offering on-chain compliance services, which included blockchain-based identity verification.
The trial explored the functionality of two differing token standards: the e-HKD embraced the widely used ERC-20 standard, while the tokenised bank deposits were based on ERC-3643. The latter standard is particularly noteworthy as it embeds crucial security features such as identity verification and transfer restrictions, thus ensuring compliance with regulatory requirements.
Expanding on Hong Kong’s earlier pilot programme from 2022, the e-HKD+ initiative focuses on programmable payment capabilities and the interoperability of both public and permissioned blockchains. With projections estimating that tokenised funds could reach US$2 trillion by 2030, the insights derived from this pilot programme will be instrumental in shaping the regulations and frameworks governing the future landscape of digital finance.
In conclusion, the collaboration of Chainlink, Visa, and various financial institutions marks a pivotal step towards the evolution of a more integrated, efficient, and transparent financial ecosystem enabled by digital currencies and blockchain technology.
