Japanese blockchain startup Soramitsu is exploring new central bank digital currency (CBDC) applications with a new project on the cross-border payment system for Asian countries.
Soramitsu will deploy Cambodia’s CBDC and fiat-pegged stablecoins as part of its new payment system targeting countries like India, China and Japan and regions like Southeast Asia.
Launched in 2020, Cambodia’s Bakong is a public-private initiative allowing Cambodian residents to pay at stores or send money through a mobile app using the local riel currency or U.S. dollars. Since its launch, Bakong’s adoption has expanded to countries like Malaysia, Thailand and Vietnam. By late 2022, Bakong reportedly had 8.5 million users and handled around $15 billion in payments.
The report notes Soramitsu is targeting expansion to other Southeast Asian countries.
As part of the project, Soramitsu plans to establish a Japanese exchange for stablecoins, which would allow conversions of currencies from diverse countries, the report says. For example, if a Thai user wanted to purchase something from a Japanese e-commerce site, the report noted, the payment would be sent as a dollar-denominated Bakong and converted to a yen-denominated stablecoin.
"Generally this project is for regulated stablecoins in Japan and other countries, as well as central bank digital currencies," a spokesperson for Soramitsu told Cointelegraph.
The representative went on to say that Soramitsu will focus on linkages between different CBDCs to ensure that each country has their own CBDC system maintained.
“Additionally, we are contributors to the SORA network and the Polkaswap DEX, so we will also explore ways to use the public, permissionless SORA network for cross-border issuance and settlement of CBDCs, with token swapping on Polkaswap,” the spokesperson added.
One of the features of Soramitsu’s planned payment network is an anticipated reduction in transaction fees. According to the firm, the fee reduction would be enabled by implementing stablecoins, which can be transferred without going through existing interbank payment networks.
To build the cross-border payment network, Soramitsu formed a team with Tokyo-based digital services company Vivit and the Tama University Center for Rule-making Strategies. It is looking to partner with major e-commerce sites.
The firm is also working with Japan’s Mitsubishi UFJ Trust and Banking and other partners to create the necessary exchange infrastructure.