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Weekly Global Stablecoin & CBDC Update
This Week's Stories (So Far)
Citi and Swift announced completion of a landmark trial demonstrating feasibility of settling payments between fiat and digital currencies using a Payment-versus-Payment (PvP) workflow. The trial leveraged existing Swift infrastructure augmented with institutional-grade blockchain connectors, orchestrators, and smart contracts to create a hybrid model bridging traditional financial systems and Distributed Ledger Technology (DLT) networks. The collaboration developed a holistic messaging standard capable of tracking end-to-end processes from trade initiation to settlement confirmation, incorporating an escrow mechanism to overcome irreversible blockchain transactions while ensuring synchronized PvP settlement. The solution utilized test USDC tokens from Circle on the Ethereum Sepolia testnet to simulate near-production environments, addressing gaps in current FX messaging standards (such as MT30X) that cannot instruct synchronized settlement between fiat and digital currencies.
Key Takeaways:
- Novel PvP approach successfully synchronizes settlement between incompatible systems (fiat accounts vs. blockchain wallets)
- Integration with Swift’s global network enables scalable institutional-grade digital asset transactions across existing financial infrastructure
- Holistic messaging standard addresses distinct data field requirements inherent in fiat-digital currency transactions
- Escrow mechanism eliminates settlement risk by ensuring atomic transaction finality for both parties
- Citi plans refinement in collaboration with broader financial community to establish operational standards
Why It Matters:
- Cross-border payment infrastructure: Bridges $1 trillion+ monthly stablecoin transaction volumes with traditional banking networks, expanding use cases beyond intra-crypto trading
- Risk mitigation: PvP settlement structure eliminates counterparty risk in fiat-stablecoin conversions, addressing major institutional adoption barrier
- Regulatory alignment: Swift integration with traditional messaging standards signals compatibility with existing compliance frameworks, facilitating regulatory approval
- Scalability pathway: Demonstrates feasibility of institutional-grade digital asset settlement without requiring parallel infrastructure, reducing implementation costs
- Market expansion: Enables recipients to redeem stablecoins for local fiat currency seamlessly, addressing current limitation where stablecoin recipients prefer immediate fiat conversion
The National Bank of Cambodia (NBC) and TenPay Global (Tencent’s international payments division, operating through WeChat Pay) signed a Memorandum of Understanding (MOU) to promote digital payment cooperation between Cambodia and China. The initiative aims to facilitate seamless cross-border payments for Cambodian tourists in China and Chinese visitors in Cambodia by enabling wallet interoperability and integration. TenPay Global emphasizes that “the path to global wallet interoperability lies at the intersection of technological advancement and sustained collaborations.” The MOU represents part of TenPay Global’s broader strategy to broaden integration of international wallets with Weixin Pay, creating connected payment ecosystems across markets. The initiative aims to enhance transaction convenience, security, and efficiency for consumers and merchants while unlocking new opportunities for cross-border commerce.
Key Takeaways:
- NBC-TenPay MOU creates formal framework for China-Cambodia digital payment interoperability and tourist payment facilitation
- Wallet integration enables users to utilize home wallets seamlessly across borders, reducing friction in cross-border transactions
- Leverages Tencent’s existing WeChat Pay ecosystem serving 900+ million users, enabling rapid deployment without new infrastructure
- Part of broader TenPay Global initiative to expand international wallet interoperability to additional jurisdictions and markets
- Focus on “technological advancement and sustained collaborations” signals multi-jurisdictional, phased expansion approach
Why It Matters:
- Regional commerce enablement: Direct payment interoperability removes friction for tourism and cross-border commerce between major Asian economies
- Technology transfer: Tencent’s fintech expertise supports NBC’s digital payment infrastructure modernization in rapidly developing market
- CBDC compatibility: Model potentially compatible with future e-CNY and CBDC integration as digital currencies expand across region
- Emerging market payment revolution: Demonstrates how digital payment leaders expand market access through partnerships rather than solely government-driven CBDC projects
- Precedent setting: Signals viability of private sector-led cross-border payment solutions in Southeast Asia ahead of regional CBDC coordination initiatives
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