Japanese banks to test cross-border stablecoin transfers via SWIFT

Japanese financial giants MUFG Bank, Mizuho Financial Group, and SMBC are preparing to test cross-border stablecoin transfers using SWIFT’s API.

Japan’s three largest financial institutions — Mitsubishi UFJ Financial Group, Mizuho Financial Group, and Sumitomo Mitsui Financial Group — are preparing to trial cross-border stablecoin transfers through “Project Pax,” a joint venture between Progmat and Datachain.

Datachain announced in a blog post on September 5 that the transfer platform will use SWIFT’s API with the aim of changing the way the global remittance landscape operates today. The initiative is designed to use stablecoins for 24/7 cross-border transactions while minimizing operational costs for banks.

“Project Pax’s cross-border transfer platform will leverage Swift’s existing API framework for banks to instruct Progmat to settle on their blockchain network, addressing AML/CFT, regulatory compliance, and operational setup challenges, while also taking into account the challenges businesses face when using wallets.”

Data chain

The trial will include transfer functionality between different blockchains using Inter-Blockchain Communication protocols.

Japanese banks focus on stablecoin market

Datachain says the ultimate goal is to create a platform for enterprise users, enabling “faster and more cost-effective international transfers without the need to be overly conscious of the existence of stablecoins or blockchain technology.”

Progmat and Datachain are major players in Japan’s evolving financial landscape, with a focus on developing stablecoin infrastructure. Progmat, backed by MUFG, facilitates the issuance of compatible stablecoins on blockchains like Ethereum and Polygon, while Datachain, which raises funds from MUFG, provides cross-chain capabilities to facilitate transfers between different networks.

The project, with scalability as a key focus, is expected to reach full commercialization by 2025, although the exact timeline has not yet been announced.