nTokens - LIFT cycle.

27/Jan/2023

These were intensive 5 months! During the last few months, nTokens has been dedicated to innovating Brazilian financial markets. This was a group endeavour: at each weekly meeting, over a dozen of Central Bank officials, project developpers by Fenasbach and other visiting researchers would put our minds together to push for new ways of money technology under Brazilian regulation.

LIFT (Financial Technology Innovation Lab) is coordinated by the Brazilian Central Bank and Fenasbac. nTokens’s was the first approved project with specific application of blockchain technology on the tokenization of money, cross-border payments, or stablecoins. Our project focus on the use of stablecoins in FX settlement.

The novel part of the project involves the entanglement of centralized registration of FX transactions and atomic settlement of distributed ledger (Stellar network). This solution delivers a fast and more secure settlement with stronger control for KYC and AML.

Transactions can be fully automated and operate in a 24x7 continuous mode. Considering compliance requirements, it allows for multiple players to post prices and interact with the same order book, thus reducing spreads and allowing more efficient price discovery.

One critical step of the project was to provide a solution for an eventual CBDC deployed as a national digital tender. Support by Central Bank officers and the open, academic-style debate of LIFT meetings were key to having our prototype fully CDBD compatible.

Our many thanks to Fenasbac, the Central Bank of Brazil and the many people directly involved in making it happen!