Japanese Firm Uses Stablecoins And CBDC To Connect Asian Countries

Using CBDCs from Cambodia, Soramitsu is creating a cross-border payment system with a focus on Southeast Asia, Japan, India, and China.

With a new project on the cross-border payment system for Asian countries, Japanese blockchain company Soramitsu is investigating potential central bank digital currency (CBDC) applications.

As part of its new payment system, which targets nations like India, China, Japan, and regions like Southeast Asia, Soramitsu will use stablecoins tied to fiat and the CBDC from Cambodia.

Nikkei stated on August 8 that the new initiative relies on Soramitsu’s CBDC expertise, including its participation in the Asian CBDC project Bakong in Cambodia and Laos’ Lao kip.

Bakong, a public-private project in Cambodia, was introduced in 2020 and enables citizens of that country to send money via mobile app or use their local currency, the riel, to make purchases at merchants. Since its introduction, Bakong has gained popularity in nations including Malaysia, Thailand, and Vietnam. According to reports, Bakong had 8.5 million users and processed $15 billion in payments by the end of 2022.

“The company is working to enable similar cross-border payments for India, China and Laos, and hopes to bring Japan into this network,” the latest report notes.

According to the report, Soramitsu intends to launch a Japanese stablecoin exchange as part of the initiative, enabling the conversion of currencies from several nations.

“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.”

Transaction fees are expected to decrease as a result of Soramitsu’s proposed payment network, which is one of its characteristics. The company claims that deploying stablecoins, which can be moved without using the current interbank payment networks, will permit the fee reduction.

Tama University’s Center for Rule-making Strategies and Tokyo-based digital services firm Vivit joined up with Soramitsu to create the cross-border payment network. It seeks partnerships with significant e-commerce platforms.

To build the essential exchange infrastructure, the company is also collaborating with Mitsubishi UFJ Trust and Banking of Japan and other partners.