The Building Blocks that make AUDD the Secure Stablecoin of the Future
08 Nov, 2022
By Effie Dimitropoulos, Executive General Manager
The growing demand for a digital currency to use in blockchain-based applications and purchases is increasing the pressure on digital token providers to be well-regulated, fully transparent and widely accessible on the most reputable commercial blockchains.
As a trusted brand already operating at the intersection of decentralised and traditional finance, Novatti has extensive experience in providing this kind of secure, cost-effective digital transaction technology to its customers.
Our newly launched stablecoin, AUDD, has been specifically designed to be fully integrated into the existing international payments network. It is secured by a 1:1 backing of the Australian dollar and is only minted when the reserves are received and held in our custodial bank account.
We believe that for AUDD to function proactively within the payments ecosystem, it needs to be utilised on a wide range of blockchains. To do this, Novatti has designed the stablecoin as a blockchain-agnostic, multichain solution – meaning AUDD will function over a number of widely-used blockchain technologies.
A Stellar structure
The initial launch of AUDD is on the Stellar blockchain and is being followed by the XRP Ledger managed by Ripple Labs Inc. We aim to follow this shortly thereafter by integrating natively on the Ethereum blockchain with other blockchains being added on a case-by-case basis.
Our first partner, the Stellar Development Foundation, is a non-profit organisation that operates a decentralised, fast, scalable and uniquely sustainable network for financial products and services. It is both a cross-currency transaction system and a platform for digital asset issuance, designed to connect the world’s financial infrastructure.
Financial institutions worldwide issue assets and settle payments on the Stellar network, which has grown to over six million accounts.
As part of its offering, Stellar has built additional protocols on top of the blockchain’s foundation layer known as ‘SEPs’ (Stellar Ecosystem Proposals). One such SEP we are integrating is SEP 12. This will allow a wallet owner (and subsequently a transaction initiator) to attach encrypted KYC/KYB information to the transaction, which is then sent along with the stablecoin to the receiving party.
Combatting potential risks
This extra protocol reflects the way a financial institution would pass on information pertaining to the sender and beneficiary to the receiving institution and helps comply with widespread Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) rules. It ensures we are in line with the standards set by the Financial Action Task Force (FATF), the global money laundering and terrorist financing watchdog.
In addition, our engagement with blockchain analysis services that ensures coverage of AUDD across its multiple blockchains helps to protect our customers from financial crime. These services offer a real-time examination of activity on a blockchain and link this with other on and off chain events in order to identify, track or action illicit funds and/or owners.
The Ripple effect
The second blockchain for the AUDD is on the XRP Ledger which is run by the payment settlement system and currency exchange network, Ripple. It can process transactions globally, serves as a trusted agent between the two parties in a transaction, and quickly confirms that an exchange has gone through properly. XRP transactions are completed in seconds with little cost.
More than 300 global financial institutions already use Ripple’s instant cross-border payments network. The Novatti Group has been a Ripple customer for the past few years.
On both the Stellar blockchain, XRP ledger and in future on the Ethereum blockchain, AUDD can be used to send money instantly anywhere across the world at a low cost, knowing that the money exists and regulations are being adhered to.
Novatti’s strong governance
At Novatti, we are fully committed to high governance standards, and this same rigour will be applied to ensure customers are comfortable using AUDD to settle transactions on the blockchain.
Novatti currently meets the requirements of its ASX stock listing, its Australian Financial Services Licence (No 448066) and its registration with AUSTRAC as a Remittance Network Provider.
Over the last two years, Novatti has had extensive interaction with AUSTRAC, APRA and ASIC for regulatory purposes and aims to meet all the reforms currently being planned for payment service providers.
How to access AUDD
AUDD can be used with our other software solutions which include Consumer Digital Wallets, Branchless Banking, Mobile Money, Bill Payments, Remittance Services and Voucher Management Systems which we provide to clients in Australia, the US, Canada, and around the world.
The decentralised ledger technology of the blockchain is growing in use as it enables people around the world to collectively maintain a database over the provenance of a key asset without relying on a central authority.
It’s a new model for sharing and reconciling information; one designed for our interconnected, global future and AUDD has the stability, technological capability and the regulatory compliance to play a central role in this emerging financial system.