August 10, 2023
By Tsering Namgyal
Japanese fintech developer Soramitsu has joined an effort to build a swift, low-cost pan-Asian digital payments system network, leveraging Cambodia’s central bank digital currency, according to Nikkei Asian Review.
Soramitsu has a track record in Asian Central Bank Digital Currencies (CBDCs), having supported the issuance of Asian CBDCs Bakong in Cambodia and Laos’ Digital Lao Kip. Bakong is already used for QR code-based digital payments between Cambodia and Malaysia, Thailand and Vietnam. As of the end of 2022, it had 8.5 million users and handled around $15 billion in payments, according to Nikkei.
The company is working to kickstart similar cross-border payments for India, China and Laos, and hopes to bring Japan into this network, according to the newspaper.
Soramitsu first will establish a Japanese exchange for stablecoins, cryptocurrencies pegged to real world assets.
Soramitsu is working with Japan’s Mitsubishi UFJ Trust and Banking and other partners to create the necessary stable coin exchange infrastructure.
“Low transaction fees are one feature of this framework. Stablecoins can be transferred without going through existing interbank payment networks, avoiding fees paid to intermediary banks,” the paper said.
The fee for the stablecoin exchange is yet to be decided, but it will be in the tens of yen per transaction, less than one-tenth the cost of a typical cross-border transfer. (10 yen equals 7 cents).
Revisions to Japan’s payment law took effect in June, making it possible for banks to issue stablecoins. Local startup JPYC and regional banks aim to issue yen-denominated stablecoins, some of which are expected to debut by 2024.
In a 2021 report on CBDC payment trials, the Bank for International Settlements has said cross-border payments that previously took three to five days could be completed in a few seconds. Payments using Bakong and the stablecoin exchange will be capable of the same speed, according to the paper.
About the author
Tsering Namgyal is the chief content officer at NFTMetta.com.