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South Africa’s Central Bank Launches Ethereum-Based Blockchain PoC

Last Updated March 4, 2021 5:04 PM
Samburaj Das
Last Updated March 4, 2021 5:04 PM

The central bank of South Africa has launched a new proof-of-concept (PoC) project to replicate interbank settlements on an Ethereum-based blockchain.

The South African Reserve Bank (SARB), the country’s central bank, has announced a new FinTech initiative that will include ‘Project Khokha’ – a blockchain PoC endeavor via a partnership with Ethereum coder collective ConsenSys, an official announcement  revealed. As the central bank’s technology partner, the Brooklyn-based Ethereum blockchain developer will enable the ‘processing of wholesale payments using Quorum’, an Ethereum enterprise blockchain developed by JPMorgan and EthLab, an Ethereum developer startup.

An excerpt from the announcement read:

“The aim of this project is to gain a practical understanding of distributed ledger technologies (DLTs) through the development of a proof of concept (PoC) in collaboration with the banking industry. The objective of the PoC is to replicate interbank clearing and settlement on a DLT which will allow the SARB and industry to jointly assess the potential benefits and risks of DLTs.”

The development to explore blockchain technology comes despite statements to the contrary by the central bank’s deputy governor who claimed the issuance of a blockchain-enabled central bank cryptocurrency would be “too risky”, in August 2017.

The SARB also plans to issue its own digital token to power its interbank settlement PoC, similar to its counterpart in Singapore. The Asian nation’s own blockchain endeavor, Project Ubin, saw the central bank tokenize a Singaporean dollar as the digital token to fuel its interbank blockchain concept, also based on Ethereum.

The SARB insists the PoC project does not directly imply a major pivot to adopting a blockchain as the core technology powering the country’s national payments infrastructure. Instead, the practical experiment will help understand the implications of ‘using a tokenized asset’ on a blockchain to transfer value, the central bank added.

A public report in the aftermath of the PoC will be released in Q2 2018, the central bank added.

Featured image from Shutterstock.