Mastercard & Standard Chartered Test Tokenized Deposits

Mastercard and Standard Chartered Bank Hong Kong (SCBHK) have successfully conducted the inaugural live test of Mastercard’s innovative Multi-Token Network (MTN). They executed a proof-of-concept pilot within the Hong Kong Monetary Authority (HKMA) Fintech Supervisory Sandbox, aimed at tokenizing carbon credits. In this experimental setup, a client of Mox Bank, SCBHK’s virtual banking arm, deposited funds and requested a carbon credit purchase. SCBHK then leveraged the services of tokenization provider Libeara, which operates under Standard Chartered’s venture division SC Ventures, to tokenize the carbon credit. Subsequently, MTN tokenized the client’s deposit, and an atomic swap of the two tokens, conducted in real-time across multiple blockchains, was carried out.

Mastercard’s MTN was officially launched in June 2023, built upon Mastercard’s private blockchain framework. Prior to this, it underwent trial runs that involved the Reserve Bank of Australia and the HKMA. These trials utilized wrapped central bank digital currency (CBDC) in Australia and HKMA’s e-HKD CBDC in Hong Kong. It is important to note that neither of these CBDCs has been implemented for live use.

Helena Chen, Managing Director of Mastercard for Hong Kong and Macau, emphasized Mastercard’s commitment to supporting the HKMA in fostering Hong Kong as a premier digital assets hub. She pointed out that Mastercard is dedicated to facilitating fintech innovation and pushing forward the tokenization market in the region.

Reports suggest that the HKMA has been urging Hong Kong banks, including SCBHK, to improve their cryptocurrency exchange services. SCBHK is actively participating in several key initiatives, including the HKMA’s Project Ensemble and the e-HKD pilot program, as well as Project mBridge, which is a multinational effort. The e-HKD pilot project, in particular, marked the commencement of its second phase in March.

On a broader scale, Standard Chartered has also engaged in projects beyond Hong Kong. It has collaborated with SWIFT on CBDC-related projects and with U.K. Finance on the Regulated Liability Network. In November, SC Ventures, the bank’s venture capital arm, established a crypto fund in the United Arab Emirates, signaling its expansion and deeper involvement in the digital assets space.

Another significant player in the Hong Kong banking sector, HSBC, has also been active in the HKMA sandbox environment. Back in November, it joined forces with China’s Ant Group to test tokenized deposit transactions using Ant Group’s proprietary blockchain technology. HSBC offers trading in Bitcoin and Ethereum futures exchange-traded funds (ETFs) in Hong Kong, showing its support for cryptocurrencies.

The successful proof-of-concept pilot by Mastercard and SCBHK underscores the ongoing efforts by major financial institutions to innovate within the fintech and digital assets sector. By leveraging blockchain technology and tokenization, they are paving the way for more secure, efficient, and transparent financial transactions.

This pilot not only highlights the technical advancements made by these institutions but also signals their commitment to environmental sustainability by focusing on tokenizing carbon credits. This dual focus on technological innovation and sustainability could set a precedent for future financial service developments.

Through these initiatives, Hong Kong is positioning itself as a leading hub for digital assets and blockchain technology, attracting global attention and investment into its rapidly evolving fintech landscape.