The Intergovernmental Fintech Working Group (IFWG) has launched Project Khokha 2 to explore the policy and regulatory implications of tokenization in the financial markets.
According to IFWG, an innovation hub that brings together key South African financial sector regulators, Project Khokha 2 will issue, clear, and settle debentures on distributed ledger technology using tokenized money in a minimum viable product (MVP) to inform policy and regulatory reflections.
Part of the press release reads:
“Industry participants will be able to purchase the debentures with a wholesale central bank-issued digital currency (wCBDC) and a wholesale digital settlement token (wToken). The wToken can be seen as a privately issued stablecoin used for interbank settlement.”
Among the key South African banking and financial industry participants that will be joining Project Khokha 2 include:
Other close partners that have been chosen to partner on the project include:
- Accenture – Responsible for developing the wCBDC based on its extensive global experience on both retail and wholesale CBDC projects
- Block Markets Africa (BMA) – Responsible for producing the DLT-based debentures as well as the wToken for the project due to its extensive experience tokenizing and trading financial instruments across various DLT platforms. Ultimately, it will help create a Khokha network to interconnect the DLTs on the project
- Deloitte – Responsble for documenting the insights gained form the project in a public report due to its gained experience on many similar international projects. It will also independently reflect on the implications brought to light through the MVP and engagement with relevant stakeholders
The presser notes:
“Project Khokha 2 is a continuation of the structured analysis of the impact of DLT on financial markets, both the benefits and the risks, by gaining practical experience through experimental trials with industry.”
According to IFWG, the project is not support for a particular technology nor should it be seen to reflect on a radical policy shift. Insteead, the objective is to assist in formulating appropriate fintech-related policy frameworks through a throught leadership report.
Members of the IFWG supporting this project include:
- Competition Commission of South Africa (CC)
- The Financial Intelligence Centre (FIC)
- The Financial Sector Conduct Authority (FSCA)
- The National Credit Regulator (NCR)
- The National Treasury (NT)
- The South African Revenue Service (SARS)
- The South African Reserve Bank (SARB)
Read / Download the press release here.
What is a Debenture?
A debenture is a type of bond or other debt instrument that is unsecured by collateral. Since debentures have no collateral backing, debentures must rely on the creditworthiness and reputation of the issuer for support.
Both corporations and governments frequently issue debentures to raise capital or funds.
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