Japanese Banks to Test Cross-Border Stablecoin Transfers

Japanese financial giants MUFG Bank, Mizuho Financial Group, and SMBC are set to test cross-border stablecoin transfers, leveraging SWIFT’s API.

Three of Japan’s largest financial institutions — Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group — are gearing up to trial cross-border stablecoin transfers via “Project Pax,” a joint initiative between Progmat and Datachain.

In a blog announcement on Sept. 5, Datachain stated that the platform for transfers will leverage SWIFT’s API in a bid to change the way the global remittance landscape functions today. The initiative is designed to utilize stablecoins for 24/7 cross-border transactions while minimizing operational costs for banks.

Project Pax’s cross-border transfer platform will utilize SWIFT’s existing API framework for banks to instruct Progmat to settle on blockchain networks, addressing AML/CFT, regulatory compliance, and operational setup challenges, while also considering the difficulties businesses face in using wallets.

The trial will include functionality for transfers across different blockchains using Inter-Blockchain Communication protocols.

Japanese Banks Focus on Stablecoin Market

Datachain says the eventual goal is to create a platform for enterprise users, enabling faster and more cost-effective international transfers without needing to be overly conscious of the presence of stablecoins or blockchain technology.

Progmat and Datachain are significant players in Japan’s evolving financial landscape, focusing on stablecoin infrastructure development. Progmat, backed by MUFG, facilitates the issuance of compliant stablecoins on blockchains like Ethereum and Polygon, while Datachain, which also raised funds from MUFG, provides the cross-chain capabilities to facilitate transfers across different networks.

The project, with scalability as a core focus, is expected to reach full commercialization by 2025, although specific timelines remain undisclosed.

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