Top 3 Major Banks in Japan to test cross border Stablecoin transfer platforms

The three major banks in Japan—MUFG, SMBC, and Mizuho—are planning to test a cross-border stablecoin transfer platform named “Project Pax” that aims to replace correspondent banks with stablecoins, thereby providing faster international settlement for businesses.

According to a press release on Thursday, the pilot test, named "Project Pax," will make use of the stablecoins issued by Progmat, a blockchain startup supported by these three banks: SBI Holdings, Japan Exchange Group, and SBI Holdings. Progmat, Datachain, and TOKI will oversee the project to facilitate cross-chain transaction testing. The "Project Pax" will soon begin with a prototype.

In 2022, the cross-border transfer market was valued at $182 trillion, or roughly ¥28,000 trillion. But the G20 has determined that there are four important areas that need major improvements: cost, speed, access, and transparency. Progmat and Datachain hope to use stablecoins in this market to facilitate cross-border transfers that are quick, affordable, and operational around the clock.

The "Progmat Coin" platform, which supports numerous blockchains, including permissionless (public) blockchains, is being developed and operated by Progmat. It serves as the infrastructure for issuing stablecoins in accordance with stablecoin regulations. This platform allows stablecoins to be issued that businesses can use with confidence, as it not only complies with legal regulations but also takes accounting and tax perspectives into consideration. Furthermore, a number of stablecoins issued via the "Progmat Coin" platform have the option to be pegged in popular fiat currencies like EUR, USD, and JPY, enabling flexible use both locally and globally.

In order to address regulatory compliance, AML/CFT, and operational setup challenges, as well as the challenges businesses face when using wallets, Project Pax's cross-border transfer platform will make use of Swift's current API framework to allow banks to direct Progmat to settle on blockchain networks. This reduces investment costs and eliminates operational redundancy with fiat currency transfers for financial institutions.

With the aim of commercializing the platform by 2025, the initiative aims to extend collaboration to more regions and financial institutions.

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