Japanese Megabanks Launch Project Pax for Faster Settlements
Japan’s largest three megabanks, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho, have unveiled an ambitious pilot project named “Project Pax” to accelerate international settlements through the utilization of stablecoins.
The initiative, developed in partnership with Progmat, a blockchain platform backed by SBI Holdings and Japan Exchange Group, aims to revolutionize the traditional settlement processes by incorporating innovative blockchain technology.
By integrating SWIFT’s API framework with blockchain networks, the project seeks to enhance transaction efficiency and reduce operational costs associated with fiat currency transfers.
Trial to Pioneer Cross-Chain Tech Integration
Project Pax’s trial, in collaboration with blockchain firms Datachain and TOKI, will delve into the potential of cross-chain technology to facilitate seamless and secure transactions across borders.
The project's objective is to establish a platform that supports swift and reliable cross-border settlements through the use of regulated stablecoins, denominated in major global currencies such as the Japanese yen, U.S. dollar, and euro.
This pioneering initiative is expected to kick off with a prototype and aims for full commercialization by 2025, positioning it as a trailblazer in the realm of international settlement systems.
Japan Contemplates Reduction in crypto Tax Rates
Meanwhile, in a bid to align with global financial markets, Japan is exploring the possibility of revising its cryptocurrency tax regulations to lower the tax rate on crypto profits to a flat 20%.
The proposed reform, advocated by the country’s financial regulator, the Financial Services Agency (FSA), underscores the potential benefits of treating cryptocurrencies as conventional financial assets, thereby enhancing accessibility for public investment.
Currently, crypto earnings in Japan are taxed under a miscellaneous income category, with tax rates varying between 15% and 55% based on the individual’s income bracket.
The FSA’s proposal to standardize the tax rate at 20% for crypto profits aims to create a level playing field akin to that of stock trading, fostering a more conducive environment for crypto investors.
Growing crypto Trading Population in Japan
Against the backdrop of the proposed tax revisions, Japan’s crypto trading landscape is witnessing a surge in popularity, with the number of daily traders projected to escalate from 350,000 to approximately 500,000 by the end of this year, according to insights from a Bitget study.
This anticipated growth will position Japan’s crypto market size between that of Turkey and Indonesia, underscoring the nation’s rapidly evolving crypto ecosystem and investor enthusiasm for digital assets.
As Japan continues to explore innovative initiatives in blockchain technology and regulatory frameworks, the future of crypto adoption in the country looks poised for significant expansion and transformation.
