Japan’s three biggest megabanks-Mitsubishi UFJ Financial Group, or MUFG; Sumitomo Mitsui Banking Corporation, or SMBC; and Mizuho-teamed up in an initiative to test the cross-border stablecoin transfer of a new innovation project to speed up international settlement. The innovation, called “Project Pax,” will make use of stablecoins issued via the blockchain platform Progmat, which was developed with backing from SBI Holdings and Japan Exchange Group.
Cross-Chain Tech for Transactions to Try
Advanced cross-chain technology will be put to a pilot test in the project, as it cooperates with blockchain companies Datachain and TOKI. This will be about bringing API framework in SWIFT to the blockchain networks, aimed at building a seamless process in support of quicker and efficient international transactions.
The use of blockchain in addition to SWIFT will focus on key areas like AML compliance and redundancy in operations when it comes to fiat money transfer. If this technology succeeds, it could slash costs and smooth the settlement process.
Stablecoin Flexibility Across Major Currencies
It aims to make Project Pax able to enable rapid cross-border settlements with the use of stablecoins that could be denominated into major currencies including the Japanese yen, U.S. dollar, and euro. This flexibility would thus provide great conveniences to businesses operating both domestically and internationally, with a potentially changed landscape for global finance.
By 2025, the pilot should evolve into a fully commercialized platform using regulated stablecoins, with the goal of making cross-border transactions as fast as sending an email.
Ripple’s Interest in Japan Stablecoin Launch
While Japan’s biggest banks are still studying the technology behind stablecoins, Ripple CEO Brad Garlinghouse says the company is also eyeing a launch of a stablecoin in them soon and is further interested in the evolving Japanese blockchain landscape.
Japan Mulls Crypto Tax Cuts
In conjunction with the pilot program, Japan’s financial watchdog, the Financial Services Agency, is considering amendments to the country’s crypto tax law. The FSA is reportedly suggesting that gains from cryptocurrencies be subjected to a 20% flat rate, like traditional financial instruments like stocks. This could ease the tax load for many crypto investors and make digital assets more attractive to the general public.
Currently, Japan taxes crypto gains as miscellaneous income at rates ranging from 15% to 55% based on income. A discounted rate could send the already fast-growing crypto market in them into overdrive-expected to have 500,000 daily traders by the end of this year.
By normalizing crypto regulations and testing blockchain-powered payment solutions, Japan is setting itself up to be a world leader in both the development of fintech and regulatory foresight.
