Japan’s banking giants are stepping forward to explore new ways to make payments faster, easier and more efficient using digital currencies.
This marks a shift in cross-border and business payments and another step closer to a future where traditional banking increasingly embraces modern technology.
Top Japanese banks work together
Three of Japan’s largest banks, MUFG Bank, Sumitomo Mitsui Banking Corp. and Mizuho Bank join forces to create a stablecoin. Nikkei reports.
The three megabanks plan to build their stablecoin using the platform of Tokyo-based fintech company Progmat, in which they all have stakes. The banks aim to create common standards for the stablecoin so that it can be used for both intra- and inter-company payments.
Yen Stablecoin first, USD later
The banks will start with a stablecoin pegged to the Japanese yen, while a US dollar version is planned for the future. They expect the Yen stablecoin to be ready for practical use this fiscal year, after a proof-of-concept trial.
Japanese trading company Mitsubishi Corporation will use the stablecoin for internal financial settlements. Mitsubishi oversees more than 240 operating companies, which regularly make international payments for dividends, customer transactions, acquisitions and investments.
Notably, the banks serve more than 300,000 key customers, and widespread adoption of their stablecoin could help Mitsubishi reduce remittance costs and ease administrative workloads, both internally and externally.
Cross-border payments pilot
By September 2024, the three banks had done so announced a pilot for a cross-border stablecoin transfer platform, Project Pax, aimed at accelerating international settlements for businesses.
The project uses stablecoins issued through Progmat, a blockchain startup backed by the three banks, as well as SBI Holdings and Japan Exchange Group. Progmat, together with Datachain and TOKI, manages the initiative and facilitates the testing of cross-chain transactions to ensure fast, secure and compliant international transfers.
Project Pax will use SWIFT’s current API system to allow banks to instruct Progmat to settle transactions on blockchain networks. This setup helps tackle money laundering and other legal compliance requirements.
According to the project, this also allows financial institutions to avoid duplicate processes used in traditional fiat transfers and reduce investment costs.
The initiative would start with a prototype phase, with the aim of launching a fully commercial platform by 2025.
Meanwhile, Japan’s Financial Services Agency (FSA) is all set to approve the country’s first yen-backed stablecoin as soon as fall 2025.
Japan is taking a leap towards the future of payments. By exploring stablecoins and blockchain, they are making it easier, faster and cheaper for companies to move money both within Japan and across borders.
Trust CoinPedia:
CoinPedia has been providing accurate and timely cryptocurrency and blockchain updates since 2017. All content is created by our expert panel of analysts and journalists, following strict editorial guidelines based on EEAT (Experience, Expertise, Authoritativeness, Trustworthiness). Each article is fact-checked from reputable sources to ensure accuracy, transparency and reliability. Our review policy ensures unbiased evaluations when recommending exchanges, platforms or tools. We strive to provide timely updates on everything crypto and blockchain, from startups to industry majors.
Investment Disclaimer:
All opinions and insights shared represent the author’s own views on current market conditions. Please do your own research before making any investment decisions. Neither the writer nor the publication accepts responsibility for your financial choices.
Sponsored and Ads:
Sponsored content and affiliate links may appear on our site. Ads are clearly marked and our editorial content remains completely independent from our advertising partners.