Japan’s top three megabanks are launching a pilot project aimed at speeding up international settlements using stablecoins.
The initiative, called “Project Pax,” will involve stablecoins issued by Progmat, a blockchain platform supported by SBI Holdings and Japan Exchange Group, the firm said in a recent press release.
The banks involved include Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho.
Trial to Explore Cross-Chain Tech for Transactions
The trial, which also involves blockchain companies Datachain and TOKI, will explore the use of cross-chain technology for faster and more efficient transactions.
It aims to integrate SWIFT’s API framework with blockchain networks, allowing banks to streamline processes and address compliance issues such as anti-money laundering.
According to the project, this integration can reduce operational redundancy and investment costs in fiat currency transfers.
Project Pax is expected to start with a prototype and aims for full commercialization by 2025.
The plan is to create a platform that offers cross-border settlements as fast as internet communication, utilizing regulated stablecoins.
The stablecoins, issued through Progmat’s platform, can be denominated in major global currencies like the Japanese yen, U.S. dollar, and euro, offering flexibility for both domestic and international use.
The project’s long-term goal is to enhance the speed and security of cross-border transactions for enterprises, potentially transforming how international settlements are handled.
Meanwhile, Ripple’s CEO Brad Garlinghouse has revealed that the company is in the process of launching a stablecoin in Japan soon.
Japan Considers Lowering Crypto Tax
Japan is considering a change to its crypto tax code, potentially lowering it to align with other financial assets.
The country’s financial regulator, the Financial Services Agency (FSA), has recently proposed a reform that could lower the tax rate on crypto profits to a flat 20%.
The FSA is advocating for the treatment of cryptocurrencies as traditional financial assets, which would make them more accessible for public investment.
“Cryptocurrency should be treated as a financial asset and an investment target for the public,” the FSA stated in its report.
Currently, Japan taxes cryptocurrency earnings under a miscellaneous income category, with rates ranging from 15% to 55%, depending on the individual’s income bracket.
The high tax rate can apply to earnings over $1,377 (200,000 Japanese yen), making it a significant burden for many crypto investors.
In contrast, stock trading profits are capped at a 20% tax rate, which the FSA suggests should be applied to cryptocurrency as well.
Notably, Japan’s use of crypto is expected to grow rapidly, with the number of people trading crypto daily rising from 350,000 to around 500,000 by the end of this year, according to a Bitget study.
The surge would place Japan’s market size between those of Turkey and Indonesia, and about two-thirds the size of South Korea’s market.
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