Japan-based technology firm Soramitsu has announced plans to develop a cross-border payment platform leveraging stablecoins and central bank digital currencies (CBDCs).
Soramitsu will use Cambodia’s Bakong as a payment offering to operate as a CBDC and fiat-pegged stablecoins, according to a Nikkei Asia report. The project seeks to improve upon the state of cross-border transactions, specifically targeting countries in India, Japan, China, and Southeast Asia.
Sorarmitsu disclosed that it would create a Japanese digital asset exchange to handle the conversion of fiat currencies to stablecoins.
“If a consumer in Thailand wanted to make a QR code-based payment to buy something from a Japanese e-commerce site, for example, the payment would be sent to the exchange as a dollar-denominated Bakong and converted to a yen-denominated stablecoin,” read the report.
Soramitsu said the offering would significantly reduce settlement times for international transactions, noting that the improved transaction fees directly result from stablecoins being transferred without using existing banking infrastructure, relying instead on the blockchain.
The Japanese-based firm added that reduced transaction fees are another benefit of relying on distributed ledgers. Although Nikkei Asia’s report did not mention the transaction fees in the offering, analysts predict that the charges will be less than one-tenth of the cost of traditional cross-border transactions.
In June, Japan lifted the ban on banks and other financial institutions from issuing stablecoins, allowing Soramitsu to partner with Mitsubishi UFJ Trust and Banking to provide the needed architecture for the offering.
Soramitsu also partnered with Japan-based technology company Vivit and Tokyo-based Tama University. The firm is searching for new partners across Southeast Asia to bring the project to reality.
The company hopes to leverage its extensive wealth of experience in building payment solutions in the regions, famously providing technical solutions in developing the Bakong and Laos’ kip.
Several projects for the region
Despite many payment platforms in the region, Southeast Asian countries are turning to Web3 solutions to improve international remittances.
In June, the Asian Development Bank (ADB) announced that it had completed a proof-of-concept (PoC) for cross-border bond settlement using distributed ledgers. Dubbed Project Tridecagon, the ADB stated that it relied on Soramitsu, Fujitsu, Consensys, and R3 for technical support.
Central banks in the region are also taken the lead in exploring the use of CBDCs for cross-border transactions, with Hong Kong, China, and India leading the charge.
To learn more about central bank digital currencies and some of the design decisions that need to be considered when creating and launching it, read nChain’s CBDC playbook.
Watch: CBDCs and BSV
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