In a bid to address the challenges of fraud and money laundering, Europe has initiated several measures to utilize the potential of blockchain technology. The European Commission has launched a comprehensive Digital Financial Package in line with the recently introduced Markets in Crypto Assets regulation (MiCA). This package aims to promote the use of cryptocurrencies and central bank digital currencies (CBDCs) while also focusing on improving cross-border payments and settlement times. The proposed Distributed Ledger Technology (DLT) Pilot Regime is a significant part of this package.
According to a blog post published by American FinTech firm Ripple on 20 July 2023, the DLT Pilot Regime is an innovative approach by the EU Commission to provide a controlled environment for market infrastructures dealing with digital assets. This”‘sandbox” offers temporary exemptions from existing rules, allowing regulators to gain practical experience with distributed ledger technology. The initiative aims to enhance investor protection, market integrity, and financial stability while also allowing companies to test and refine existing rules.
In response to these initiatives, Ripple, a leading FinTech firm, and SUPER HOW?, a Lithuanian blockchain technology research lab, have launched a collaborative project called Axiology. The project aims to test and issue digital assets, including CBDCs and stablecoins, to increase regulators’ confidence in the security of these digital assets. Axiology is a tokenized securities trading and settlement system (DLT TSS) infrastructure that allows multiple layers of the current capital market infrastructures to coexist on one technology layer, leading to synergies, process efficiencies, and new business models.
SUPER HOW?, recognized as the “Fintech Innovator of the Year” in the Lithuanian Fintech Awards in 2022, brings its expertise in projects involving central bank digital currencies to the partnership. Ripple says the Axiology project, built on the XRP Ledger, is another example of its commitment to driving innovation and advancing the adoption of blockchain technology in the financial industry.
James Wallis, VP of Central Bank Engagements at Ripple, had this to say:
“Ripple is delighted to be working with SUPER HOW? and the Axiology decentralized securities project, further developing our commitment to delivering real world use cases for CBDCs. The project aims to develop a regulatory-compliant infrastructure within the scope of the European Union DLT Pilot Regime Regulation. The settlement of tokenized securities requires a tokenized settlement asset such as a CBDC or stablecoin. This will enable instant issuing and settlement of a securities asset – such as a bond or share. This project will deliver significant learning for a future CBDC which can then be issued by European banks.”