National Australia Bank Completes the Development of Stablecoin AUDN
- National Australia Bank (NAB) has completed the creation of a fully backed stablecoin called AUDN.
- AUDN is built on the Ethereum blockchain and is pegged in a 1:1 to Australian fiat money held on trust by the NAB.
- The bank is reportedly conducting internal texting, including transferring money between subsidiaries and branches.
- The NAB is planning to launch the stablecoin sometime in mid-2023 along with carbon credit trading and remittance services.
Amid regulatory concerns regarding the stability of blockchain-based stablecoins, the National Australia Bank (NAB) has announced that it has completed the development of a fully backed stablecoin called AUDN that aims to help business customers settle transactions in Australian dollars.
Notably, AUDN, which is built on the Ethereum blockchain, is pegged 1:1 to Australian fiat money held on trust by the NAB. Along with the Ethereum network, it will also debut on the Algorand blockchain, a smart contract platform akin to Ethereum.
According to a recent report by the Australian Financial Review, the bank is currently conducting internal texting, including transferring money between subsidiaries and branches, which is being supervised by banking regulatory authorities.
Notably, the NAB is planning to launch the stablecoin sometime in mid-2023. The launch will also include carbon credit trading and remittance services. Moreover, the bank is planning to offer stablecoins in multiple currencies in jurisdictions where it has licenses, according to NAB’s chief innovation officer, Howard Silby.
The stablecoin will mainly serve as a settlement token between multiple parties to transactions. According to Silby, AUDN could be used for things like carbon credit trading, global money transfers, and repurchase agreements. Silby stated that the NAB believes that a number of blockchain technology have the potential to “form part of the future of finance.” He further stated:
“That continues to be the source of some debate. But certainly, from our point of view, we see [blockchain] has the potential to deliver instantaneous, transparent, inclusive, financial outcomes.”
The Australian Financial Review, which broke the news, referred to this as “atomic settlement,” which the NAB is trying to implement in some markets.
It is important to note that this is not the first time a bank in Australia has attempted to launch a stablecoin. The development of AUDN comes nine months after Melbourne competitor ANZ developed a similar product called A$DC.
The development of stablecoins by individual banks emerged as a result of the big four banks’ early-2022 attempt to launch an industry-wide Australian dollar stablecoin, which was unsuccessful due to competition issues and banks being at different stages in their cryptocurrency strategies.
Moreover, banks are racing to create new types of digital currency as a form of competitive pushback against technological firms. Banks seek to benefit from their regulated and trusted position in the economy.
Despite a chaotic year for cryptocurrency markets in 2022, which culminated in the collapse of the once-leading crypto exchange FTX and the arrest of its founder, Sam Bankman-Fried, banks have continued to show interest in blockchain technology to advance the infrastructure of financial markets.
It also follows the failure of Terra Luna, another stablecoin that was supported by other cryptocurrencies rather than a national currency, last year.
While stablecoin regulations are still developing in the region, NAB and ANZ are collaborating closely with financial regulators. In December 2022, Governor of the Reserve Bank Philip Lowe stated that stablecoin regulation must be given top priority and that they should be handled similarly to bank deposits.
As reported earlier by Bitnation, the Central Bank of Iran and Russia are working together to launch a new stablecoin that is backed by gold. The stablecoin is expected to replace the need for the Russian ruble, US dollar, or Iranian rial for cross-border transactions.