Within Europe, a series of initiatives are underway to actively address the challenges posed by fraud and anti-money laundering (AML), while simultaneously leveraging the exciting potential of blockchain-based systems. In line with the recently introduced Markets in Crypto Assets regulation (MiCA), the European Commission has unveiled a comprehensive Digital Financial Package, strategically designed to mitigate the risks associated with money laundering and security breaches. This transformative package not only encourages the adoption of cryptocurrencies and central bank digital currencies (CBDCs) for financial innovation but also prioritizes the acceleration of cross-border payments and settlement times. A key component of this groundbreaking EU Finance Package is the proposed Distributed Ledger Technology (DLT) Pilot Regime.
Minimizing Risk: The EU DLT Pilot Regime
In an effort to cater to market infrastructures engaged in trading and settling transactions involving digital assets, the EU Commission has introduced an innovative pilot regime. This revolutionary approach establishes a controlled environment, akin to a ‘sandbox,’ providing temporary exemptions from existing rules. By granting regulators the opportunity to gain hands-on experience with distributed ledger technology within market infrastructures, the DLT Pilot Regime aims to ensure robust investor protection, safeguard market integrity, and fortify financial stability. Additionally, this initiative empowers companies to test and refine existing rules through practical implementation.
Axiology Project: A Collaboration Between Ripple and SUPER HOW
Building upon this foundation laid by the EU’s proactive initiatives, Ripple and SUPER HOW? have embarked on an ambitious collaboration known as the Axiology project. This collaboration serves as a catalyst for testing and issuing digital assets, including central bank digital currencies (CBDCs) and stablecoins, to bolster regulators’ unwavering confidence in the safety and security of these transformative digital assets.
SUPER HOW?, a private blockchain technology research lab based in Lithuania, brings its expertise in cutting-edge projects involving central bank digital currencies to the partnership.
Axiology is a tokenized securities trading and settlement system (DLT TSS) infrastructure. This infrastructure enables multiple layers of the current capital market infrastructures to coexist on one technology layer leading to multiple synergies, process efficiencies and new business models. This collaboration aligns with Ripple's commitment to driving innovation and advancing the adoption of blockchain technology in the financial industry.
”The current regulatory environment shaped by the EU initiatives in the retail capital market and crypto economy creates a perfect development environment and calls for new types of infrastructures to emerge. We strongly support this EU direction and want to be part of this movement.”
Dr. Marius Jurgilas, CEO, Axiology
Built on the powerful technology of the XRP Ledger, the Axiology project showcases yet another tangible, real-world business application for tokenization and digital assets on the XRPL.
“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.”
James Wallis, VP of Central Bank Engagements, Ripple
The DLT Pilot Regime offers a unique platform for Ripple and SUPER HOW?, as innovative enterprises, to play an instrumental role in fostering the safety and security of digital assets markets for all participants. By subjecting the DLT Pilot Regime to rigorous testing through the Axiology project, regulators gain unparalleled assurance regarding the resilience and security of digital assets.
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