Project Pax: Japanese Major Banks Trial Cross-Border Stablecoin Platfo

What is Project Pax and its Details

Japan's three major banks, Mitsubishi UFJ Bank (MUFG), Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho Bank (Mizuho)—are set to trial a cross-border stablecoin transfer platform named "Project Pax," aiming to revolutionize international settlement for enterprises. The initiative leverages stablecoins issued via Progmat, a blockchain startup supported by these banks, SBI Holdings, and Japan Exchange Group.

Project Pax: A New Era of Cross-Border Payments

"Project Pax" will utilize the stablecoins issued through Progmat, facilitating faster international settlements. The project, conducted by Progmat, Datachain, and TOKI, will test cross-chain transactions using SWIFT's existing API framework. 

This integration allows banks to instruct Progmat to settle on blockchain networks, addressing anti-money laundering (AML) and other compliance challenges, while minimizing operational redundancy and investment costs. The project plans to initiate with a prototype and aims to commercialize the platform by 2025. 

By integrating regulated stablecoins and secure cross-chain messaging standards with the current cross-border messaging framework, "Project Pax" intends to enable cross-border settlements at internet speed. Progmat's stablecoin platform, "Progmat Coin," supports stablecoins denominated in major fiat currencies like JPY, USD, and EUR, offering flexible use domestically and internationally.

Swift Integration and Broader Implications

To facilitate conventional trade payments for corporate customers, Swift payment messages will be integrated with the stablecoin system. This method prevents clients from directly handling stablecoins, addressing AML and compliance issues. The ultimate aim is to support 24/7 payments, aligning with the G20’s goals for faster, cheaper, and more transparent cross-border transactions.

Progmat, in collaboration with Datachain, is developing interoperability solutions that connect its permissioned network, using the Corda enterprise blockchain, with various permissionless networks like Ethereum, Avalanche, Polygon, and Cosmos. Datachain's TOKI will manage DeFi-style liquidity pools for exchanging different currencies and blockchain stablecoins under "Project Pax."

Other DLT projects are also focusing on cross-border payments. For example, JP Morgan, DBS Bank, and Standard Chartered's Partior project uses DLT to streamline correspondent banking payments, enabling 24/7 transactions. Additionally, BIS's Project Agorá aims to leverage wholesale CBDCs for similar purposes.

Conclusion

"Project Pax" marks a significant step in integrating blockchain with traditional banking and adding more value to Japan crypto regulations. By leveraging regulated stablecoins and SWIFT integration, the initiative aims to provide faster, more transparent, and 24/7 cross-border payments, aligning with global financial innovation goals.

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