National Australia Bank (NAB) has completed the world’s first cross-border transaction using a bank-issued stablecoin on the Ethereum blockchain.
According to a statement released by NAB, the pilot transaction was executed using AUDN stablecoin on the public and permissionless network by deploying stablecoin smart contracts for seven global fiat currencies. The currencies were the Australian, U.S., Singapore, and New Zealand dollars, Euros, Japanese yen, and British pound.
National Bank of Australia Conducts World’s First Cross-Border Settlement In Stablecoins
AUDN, which was first announced by the bank in January 2023, is an ERC-20 standard token backed one-to-one with the Australian dollar. The stablecoin was developed to help Australians make real-time cross-border remittances, eliminating the need to depend on the much slower and costlier SWIFT payment network. NAB expects to launch the stablecoin by the end of the year.
Australia’s Big 4 bank partnered with Fireblocks, a digital asset custody, transfer, and settlements platform, and smart contract developer BlockFold to build and deploy its fiat-denominated crypto tokens.
Both companies were responsible for creating the stablecoin smart contracts, securely minting and burning the tokens, and managing custody of the digital assets on the Ethereum blockchain.
The pilot project demonstrated the potential to cut cross-border transaction times from days to mere minutes. The project is part of NAB’s efforts to help its clients operating in multiple jurisdictions and currencies make simple and faster remittances. The service, expected to be launched by 2024, will allow the bank’s corporate and institutional clients to transact in blockchain-issued stablecoins.
Drew Bradford, the Executive General Manager of NAB, said the pilot demonstrates the bank’s focus on “simplifying international banking protocols to increase speed and transparency while lowering costs and reducing complexity for customers”.
BlockFold CEO and co-founder Francois Schonken said the trade was the first time a cross-border, multi-currency exchange was executed in stablecoins issued by a large regulated financial institution.
Fireblocks CEO Michael Shaulov lauded NAB’s efforts and said the trade execution underpinned by blockchain technology marks the beginning of the evolution of financial services from Web 2.0 to Web 3.0.
The statement notes that National Australia Bank decided to issue its AUD-backed stablecoin on a public and permissionless Layer-1 blockchain to allow for greater transparency, accessibility, and scalability.
Australia’s Bank-Issued Stablecoins and Digital Currency
AUDN is the second stablecoin issued by a Big 4 bank, with the first being Australia and New Zealand Banking Group’s (ANZ) A$DC stablecoin, issued in March 2022. Fireblocks was also the token’s infrastructure provider, while on-chain auditing firm OpenZeppelin audited smart contracts for the Etheruem-based stablecoin.
In AUZ’s first pilot transaction, Australian industrialist Victor Smorgan Group sent A$DC worth AUD 30 million (approximately $20 million) to digital asset fund manager Zerocap using the bank’s blockchain payments settlements network.
Last month, the Reserve Bank of Australia (RBA) announced a partnership with private companies to study probable use cases for the Australian digital dollar.
Companies, including global payments giant Mastercard, Australian Bond Exchange, Commonwealth Bank, ANZ, and NAB, were selected by the central bank to develop usage criteria for the eAUD ranging from offline payments to bond settlement and livestock auctions. The pilot program, expected to run until Q3 2023, will publish its results by the end of the year.