Japan is making a major move in cross-border transactions with a pilot project, Project Pax. It primarily seeks to test a stablecoin platform in order to increase the efficiency of international transactions. This includes speed, efficiency, and cost of transactions. A total of three banks are involved, namely MUFG, SMBC, and Mizuho.
Blockchain firms Datachain, Progmat, and TOKI will run Project Pax. They will serve as key facilitators during the pilot testing. If it stands the test of time, the project will be commercialized by 2025, that is, in the next year. It is anticipated that more banks from all around the world will participate in the testing program; however, details regarding the planned banks have not yet been released.
Currently, international settlements are primarily relevant to enterprises, but there is a scope that extends beyond this segment. A press release initially announced the launch of Project Pax.
Project Pax aims to capitalize on the capabilities of the existing SWIFT API framework for banks. They will issue instructions to Progmat about settling on blockchain networks. This is expected to play a very important role in monitoring anti-money laundering activities, among other compliance challenges.
The team behind the project published a blog post, saying that they were looking forward to enabling cross-border settlements for enterprises by integrating regulated stablecoins, adding that transactions will happen at the speed of the Internet.
Developments by the three Japanese banks on Project Pax come at a time when the crypto market is going through a rough patch. Tokens are down amid speculation of a recession across the United States. Plus, there are other factors at play, like political scenarios and wars in some parts of the world. Traditional trades and transactions are subject to sanctions, and there is no set time frame for their ease of use.
Institutions are the primary target; however, there is no doubt that it will eventually include other participants who conduct traditional transactions, even if it means sending small amounts as pocket money. Stablecoins are at stake here, posing the possibility of a higher adoption for cryptocurrencies if the project rolls out positive results. The project’s commercialization is not anticipated to occur prior to 2025. There are still more than three months remaining in the current year, which should be sufficient to evaluate the system’s mechanisms.
The participation of blockchain enterprises indicates one important aspect: their recognition. Blockchain firms are no longer excluded from the traditional financial system. If anything, they are seeing a higher integration that digs a lot deeper than they had expected. Collaborating with authorities to test cross-border systems allows them to pitch their offerings for the betterment of the ecosystem.
All eyes are focused on how Project Pax operates and whether banks from around the world participate. Stablecoin platforms and blockchain firms have a lot to prove.