Japan’s three largest banks are developing a joint stablecoin for cross border payments through Project Pax, an initiative that has now been designated a “Payment Innovation Project” (PIP) by the country’s Financial Services Agency (FSA). The project, initiated last year by DLT platform Progmat, involves MUFG, SMBC and Mizuho and operates within the regulator’s FinTech PoC Hub framework.
Japanese stablecoin legislation came into force in 2023, but the first stablecoin only went live last week, JPYC. The law supports stablecoins issued by three types of entities: funds transfer service providers such as JPYC, trust banks acting for third parties, or commercial banks.
Project Pax will adopt the trust bank option, given it’s a joint stablecoin. Hence, MUFG Trust is involved as the stablecoin issuer, with Mitsubishi Corporation participating to use the stablecoin to make payments between its Japanese and overseas subsidiaries. At this stage the work is still described as a demonstration experiment.
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