Chainlink (LINK) has successfully facilitated a CBDC–stablecoin exchange between Hong Kong and Australia in a pilot with Visa,…

Chainlink (LINK) has successfully facilitated a CBDC–stablecoin exchange between Hong Kong and Australia in a pilot with Visa, Fidelity, and China AMC. The cross-border exchange was the Hong Kong CBDC against an Australian dollar stablecoin using Chainlink’s CCIP protocol. The effort marks a significant step in blockchain-based cross-border payments, with Chainlink at the forefront.

The initiative was piloted by Visa, ANZ, China AMC, and Fidelity International. This initiative forms part of Phase 2 of the e-HKD+ Pilot Program—an ongoing project led by the Hong Kong Monetary Authority. The HKMA is working to expand the practicality of digital currency like the digital Hong Kong dollar and stablecoins. The exchange pilot is a significant proof-of-concept that highlights the potential for coexisting ecosystems, where state-issued CBDCs and privately-issued stablecoins interact securely and efficiently.

How The Transaction Works

This is how the two banks behind the Hong Kong CBDC and Australian Stablecoin:

• An investor who is an ANZ customer in Australia requests to purchase a Hong Kong MMF using their deposits at ANZ.
• Using investors’ deposits, ANZ conducts a foreign exchange transaction of AUD to HKD internally.
• ANZ calls the VTAP APIs to request the minting of an equivalent amount of tokenized HKD deposits.
• VTAP mints tokenized HKD deposits to the Investor’s wallet on Ethereum Sepolia.

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“We are extremely excited about the future of tokenization for payments,” a representative from Visa Crypto said in a statement. “Visa’s long-term collaboration with the HKMA and our partners for two consecutive years has provided us with many valuable insights around tokenization technology and new business flows. We are excited to work with our partner banks to bring to life real-world applications of tokenization to the region.

According to Visa, in the next stage of the pilot, the Pilot Participants will continue executing end-to-end testing of transactions, which will provide insights into how tokenization can reduce settlement-related counterparty risk. Industry analysts say these pilots may serve as a blueprint for broader adoption of CBDCs and stablecoins in the future. While questions around regulatory frameworks, consumer protections, and system resilience remain amongst several nations and companies, the technical feasibility of stablecoins is becoming clearer.

LINK, Chainlink’s native cryptocurrency, responded positively to the development, climbing 2% on Monday morning.