Japan’s three largest banks—Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho—are launching a pilot project to accelerate international settlements using stablecoins. The initiative, named “Project Pax,” will involve stablecoins issued through Progmat, a blockchain platform supported by SBI Holdings and Japan Exchange Group. The project aims to create a more efficient and faster cross-border settlement system.
According to the banks in a recent press release, the trial will explore cross-chain technology for transactions involving multiple blockchain networks. It aims to integrate SWIFT’s API framework with these blockchain networks, allowing the banks to streamline processes and address compliance issues like anti-money laundering. The integration is expected to reduce operational redundancy and lower investment costs in fiat currency transfers. “This integration can reduce operational redundancy and investment costs in fiat currency transfers,” the project’s description noted.
The trial, involving blockchain companies Datachain and TOKI, will start with a prototype and is targeting full commercialization by 2025. The plan is to develop a platform that enables cross-border settlements to be executed with internet communication speed. The stablecoins will be available in major currencies such as the Japanese yen, U.S. dollar, and euro, providing flexibility for domestic and international use. The banks involved believe this can enhance the speed and security of enterprises’ cross-border transactions.
Japan’s big 3 banks, MUFG, SMBC and Mizuho are involved with a cross-border payment system, Project Pax, that aims to use stablecoins instead of correspondent banks.
Project PAX going live with SWIFT integrated Blockchains by 2025.
RLUSD // Ripple // XRP https://t.co/DI7TX88MF6 pic.twitter.com/bRfdiWyUmO
— Chad Steingraber (@ChadSteingraber) September 5, 2024
Japan’s Financial Regulator Proposes Lower Crypto Taxes
Japan is considering revising its tax code for cryptocurrencies, potentially aligning the tax rate with that of other financial assets. The Financial Services Agency (FSA) has proposed changes to lower the tax rate on cryptocurrency profits to a flat 20%. “Cryptocurrency should be treated as a financial asset and an investment target for the public,” the FSA stated in a report.
Currently, cryptocurrency earnings in Japan are categorized under miscellaneous income, with tax rates ranging from 15% to 55%, depending on the individual’s income bracket. This includes a high tax rate for earnings exceeding $1,377 (200,000 Japanese yen). In comparison, stock trading profits are capped at a 20% tax rate, which the FSA suggests should also be applied to cryptocurrencies.
The proposed changes are intended to treat cryptocurrencies more like traditional financial assets, potentially making them more accessible for public investment.
According to a study by Bitget, the number of people trading cryptocurrencies in Japan is expected to grow from 350,000 to around 500,000 by the end of this year. This would place Japan’s market size between Turkey and Indonesia at about two-thirds the size of South Korea’s market.
Meanwhile, Ripple CEO Brad Garlinghouse has disclosed that the company plans to launch a stablecoin in Japan soon.
