Soramitsu Explores CBDC Cross-Border Payments

The Japanese blockchain startup Soramitsu is exploring new applications for central bank digital currency (CBDC) with a new cross-border payment mechanism for Asian nations.

Soramitsu will implement Cambodia’s CBDC and fiat-pegged stablecoins as part of its new payment system aimed at India, China, Japan, and Southeast Asian regions.

Nikkei reported on August 8 that the new initiative builds upon Soramitsu’s CBDC expertise, including its participation in the Asian CBDC projects Bakong in Cambodia and Lao Kip.

Bakong is a public-private initiative launching in 2020 that enables Cambodian residents to pay at stores or transmit money via a mobile app using the local currency, riel, or U.S. dollar.

Since its introduction, Bakong has spread to countries such as Malaysia, Thailand, and Vietnam.

By the end of 2022, Bakong reportedly had 8.5 million users and processed approximately $15 billion in transactions.

“The company is working to enable similar cross-border payments for India, China, and Laos and hopes to bring Japan into this network,” the most recent report states.

As part of the project, Soramitsu plans to establish a Japanese exchange for stablecoins, which would enable the conversion of currencies from various countries, according to a report, which adds:

“If a consumer in Thailand wanted to make a QR code-based payment to buy something from a Japanese e-commerce site, for example, the payment would be sent to the exchange as a dollar-denominated Bakong and converted to a yen-denominated stablecoin.”

One of the features of Soramitsu’s planned payment network is a reduction in anticipated transaction fees.

According to the company, implementing stablecoins, which can be transmitted without using existing interbank payment networks, would enable the fee reduction.

Soramitsu formed a team with the Tokyo-based digital services company Vivit and the Tama University Center for Rule-making Strategies to construct the cross-border payment network.

It seeks partnerships with large e-commerce sites.

Additionally, the company collaborates with Mitsubishi UFJ Trust and Banking and other partners to develop the required exchange infrastructure.