Blockchain fintech company Millicent Labs has completed a sandbox test for a full-reserve digital currency (FRDC) with co-funding from the UK government’s Research and Innovation branch.
An FRDC is a privately issued digital currency pegged to a fiat currency, according to Millicent. The company believes it avoids the pitfalls of central bank digital currency and stablecoins while bridging blockchain technology with traditional finance.
Millicent plans to introduce a suite of FRDCs that are fully collateralised by cash deposits in a central bank account safeguarded by a regulated third party.
The demonstration for Innovate UK, the UK government’s research initiative, was intended to highlight the FRDC’s ability to bridge blockchain and traditional technology. It simulated fiat on-ramping from a large consumer bank, on-chain conversion and minting of FRDC tokens pegged to the British pound sterling.
It also tested scenarios including micropayments, use of a QR code, and peer-to-peer payments. The payments were tested across a variety of platforms, including mobile app, custodial wallet, and non-custodial wallet.
Stella Dyer, CEO at Millicent Labs, said, “We are extremely proud to have presented this world-first solution to Innovate UK — especially during such a turbulent time for the crypto markets.”
Millicent pointed out on its website that its FRDC is a kind of “synthetic” CBDC, allowing it to overcome the tendency for CBDCs to be “overly-focused on domestic policy—a strategy that risks simply replacing today’s siloed, closed-loop financial systems with new ‘digital islands.’”
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