09 Sep, 2024

Japan’s Big 3 Banks to Use Stablecoins, Swift for Cross Border Payments

Japan’s big 3 banks, MUFG, SMBC and Mizuho are involved with with a cross border payment system, Project Pax, that aims to use stablecoins instead of correspondent banks. However, in order to ensure that corporate customers can trigger trade payments in the conventional manner via their banks, Swift payment messages will be integrated with the stablecoin system, which is based on Progmat. Hence, the clients don’t touch the stablecoins.Given the efficiencies of stablecoin payments, the aim is to support 24/7 payments to address the G20’s goals for faster, cheaper, more transparent cross border payments. The total market capitalization of stablecoins has reached $170 billion with cryptocurrency as the primary use case, although they are also used for P2P payments.Meanwhile, Progmat is a DLT-based tokenization network founded by MUFG, in which Mizuho and SMBC are joint venture partners alongside other institutions. Additionally, there’s a Progmat Coin solution which is primarily used for trust-based stablecoins, which have ring-fenced assets.Progmat has been working with Datachain for some time on interoperability solutions to connect the permissioned Progmat network that uses the Corda enterprise blockchain with various permissionless networks. Those include Ethereum, Avalanche, Polygon and Cosmos. Additionally, Datachain founded TOKI a cross chain bridge that will run DeFi style liquidity pools for exchanging different currency and blockchain stablecoins. These solutions will be used as part of Project Pax, which is a joint venture between Progmat and Datachain.Given the work that’s already been done, they aim to start testing a prototype ‘shortly’. The Pax members also plan to collaborate with other financial institutions in Japan and elsewhere, looking to go live by 2025.Regarding the Swift integration, the messages will instruct payments to settle via blockchain networks. This is seen as addressing bank operational issues and removes the need for corporates to deal with the unfamiliar concepts of wallets and keys. Plus, it addresses AML and other compliance concerns.Other stablecoin and DLT initiativesProgmat already has several collaborations for stablecoin payments. Last year MUFG and DRW Cumberland started exploring JPY and USD stablecoins for institutional crypto settlement. This will involve the Japanese wallet provider Ginco issuing XJPY and XUSD stablecoins.It also has a partnership with existing Japanese stablecoin JPYC and with Standage, a Japanese specialist in export settlement.Stepping back, other DLT initiatives are targeting cross border payments. Of course, there is Ripple On Demand Liquidity solution that uses XRP as an intermediate currency and is used by remittance companies.On the institutional side, JP Morgan, DBS Bank and Standard Chartered are involved in Partior that uses DLT to smooth the correspondent banking payment process. This enables banks that connect to the network to make cross border payments 24/7. While the client banks can make instant payments, the settlement banks still have to settle up between themselves, which they do in the conventional manner. Both SMBC and Mizuho have done some work with Partior.More recently, the BIS launch Project Agorá which has similar goals to Partior. Its major advantage is the involvement of seven central banks that can provide wholesale CBDCs. This would sidestep Partior’s issue of the settlement banks needing to settle between themselves conventionally.Project Pax is one of an ever expanding range of projects in the realm of stablecoins, tokenized deposits and DLT payments.

04 Sep, 2024

Mercuryo Launches Spend, a Virtual Mastercard That Lets Users Pay With Non-custodial Crypto

Quick Take① Mercuryo has launched Spend in Europe, enabling users to create a virtual debit card via their non-custodial crypto wallets — integrated with Apple Pay or Google Pay.②The euro-denominated Mastercards are designed to bridge the gap with traditional payment methods.Mercuryo Launches Spend, a Virtual Mastercardthat Lets Users Pay With Non-custodial CryptoCrypto payments infrastructure platform Mercuryo has launched Spend in Europe — enabling users to create a virtual debit card via their non-custodial wallets to pay using 40 cryptocurrencies at over 100 million merchants in the Mastercard network.The euro-denominated Mastercards, issued by Quicko, are designed to bridge the gap between self-custodial crypto wallets and traditional payment methods.Spend provides digital asset holders with a widely accepted payment card that Mercuryo claims can be opened in minutes and integrated with Apple Pay or Google Pay, with the funds automatically converted into fiat for merchants.Spend can be directly embedded within non-custodial wallet provider applications as a “plug-and-play” solution, providing the same level of protection as traditional debit cards. However, it requires additional KYC and AML verification procedures.“At Mercuryo, our vision is to bridge the gap between web3 and the world of fiat transactions,” Mercuryo co-founder and CEO Petr Kozyakov said in a statement. “This product is not just a card; it’s a step towards a future where digital tokens can be spent in a highly accessible and commonplace way, much the same as fiat.” Spend is currently available to users in the European Economic Area, incurring a €1.60 ($1.78) issuance fee and a €1 ($1.11) monthly maintenance fee with a spending limit of €40,000 ($44,393) per month. Mercuryo also plans to roll out Spend in other regions globally.