National Australia Bank Launches Stablecoin, AUDN for Atomic Settlements

As reported by the Australian Financial Review, the National Australia Bank (NAB) has developed its own asset-backed stablecoin, dubbed AUDN.
ANZ Banking Group, another one of Australia’s major banks, launched its Australian dollar-pegged stablecoin A$DC last year.

The National Australian Bank (NAB) has become the second of 4 major banks to ever launch an Australian dollar-pegged stablecoin on the Ethereum Network and Algorand Blockchain, a smart contract platform similar to Ethereum.

The AUDN stablecoin will launch in months to come, as per the report by Australian Financial Review. The stablecoin allows business customers to settle transactions in Australian dollars.

Primarily, the stablecoin will be used as a payment token, including trading carbon credits, sending money overseas, and repurchasing agreements.

A stablecoin is a cryptocurrency that depends on two tokens, and an algorithmic stablecoin is a that is based on a set of rules.

Carbon trading is a key opportunity to adopt stablecoins, it allows payment at the same time that carbon credits are transferred to occur “on-chain”, or on the same platform, without linking to legacy payment networks. Hence creating trading efficiencies and reducing settlement risk.

According to the Australian Financial Review, the transactions are known as atomic settlements. The NAB is on the move to transition to some markets, as it highlights its role in driving innovations in the digital economy. In a statement, the Innovation officer for NAB said that they’re planning to offer stablecoins in “multiple currencies” where the bank has licensed.

NAB’s minting of a stablecoin comes nine months after Melbourne rival ANZ created a similar product, known as A$DC.

The stablecoin pegged to the Australian dollar failed due to spiking competition and banks having unaligned strategies in navigating the crypto industry. Besides that, so much skepticism rose around the crypto sector can largely be put down by the Terra ecosystem collapse last year in July.

Australia’s 2nd biggest bank, NAB, is launching a stablecoin called AUDN on the Ethereum network.

Could widespread bank adoption of L1 networks to power stablecoins be a bullish thing for crypto?

— Miles Deutscher (@milesdeutscher) January 19, 2023

It wasn’t the first algorithmic stablecoin to deppeg from the U.S. dollar but it was easily the biggest and most dramatic up to that point.

This trend is expected to continue, the adoption of crypto technology in financial institutions. The big players who adopt this, see the potential to create significant efficiencies in the financial system and that it is an explicit recognition of the competitive advantage to traditional payment systems.