Japan’s Three Largest Banks to Pilot a Stablecoin Platform for International Settlements

Japan’s three largest banks, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, and Mizuho Bank, are set to pilot a stablecoin platform for faster international settlements.

While cross-border transfers reached $182 trillion in 2022, the G20 identified four concerning areas—cost, speed, access, and transparency—which can be effectively improved by leveraging stablecoins for international settlements.

Pilot Testing Program 

Dubbed “Project Pax,” the pilot test will be run by three blockchain companies: Progmat, Datachain, and TOKI. It will initiate tests for the cross-border stablecoin transfer platform with other financial institutions worldwide.

The banks will use Progmat’s stablecoin platform during this trial. This is due to its compliance with legal regulations. Moreover, the stablecoins issued within the platform meet accounting and tax regulatory standards.

Backed by top Japanese financial institutions like SBI Holdings and Japan Exchange Group, Progmat has developed its “Progmat Coin” stablecoin platform. Stablecoins issued within the platform can be denominated in major fiat currencies such as JPY, USD, and EUR, allowing for flexible local and international usage.

Project Pax will employ SWIFT’s existing API framework to instruct Progmat to settle on blockchain networks. According to a press release, this approach aims to address Anti-Money Laundering (AML)/Counter-Financing of Terrorism (CFT) compliance and difficulties with operational setup “while also considering the difficulties businesses face in using wallets.”

“This enables financial institutions to avoid operational redundancy with fiat currency transfers and minimize investment costs,” Datachain said in the press release.

Commercialization by 2025

The pilot program will commence with a prototype to commercialize the cross-border stablecoin transfer platform by 2025. 

“As we move towards commercialization, we will gradually expand the number of participating financial institutions and target regions, aiming to establish a global standard for international payment networks using stablecoins,” Datachain said.

If successful, the latest initiative is expected to expand the market size of the stablecoin market as it is integrated into the global economy. Datachain projects that the stablecoin market could exceed $2.8 trillion by 2028.