Alibaba’s global business-to-business platform is working to streamline cross-border payments using tokenized versions of major currencies, part of a broader move toward blockchain-based settlement in global commerce.
Kuo Zhang, president of Alibaba.com, told CNBC that the platform plans to start using token deposits backed by fiat currencies such as the US dollar and the euro. The technology, which it will develop in partnership with JPMorgan, is designed to speed up transactions and reduce the number of intermediaries needed for international payments.
In today’s cross-border commerce, a U.S. buyer sending dollars to a Chinese supplier may have their funds routed through multiple banks and undergo multiple currency conversions, adding both time and cost. With a tokenized currency, a digital version of that dollar could be transferred directly through a blockchain-based system, without going through intermediaries.
Alibaba.com will use JPMorgan’s blockchain-based JPMD infrastructure, a system designed to move tokenized deposits between institutional clients. Unlike stablecoins, which are typically issued by non-banks and backed by assets such as Treasury bills, tokenized deposits appear on a regulated bank’s balance sheet.
Zhang said the company is also exploring the possibility of adopting stablecoins in the future, but will first focus on digital tokens issued by banks to ensure regulatory and operational clarity.
