Key Takeaways
- Japan’s banking giant launched a stablecoin pilot with AVA Labs and Fireblocks.
- The stablecoin aims to rival SWIFT for cross-border settlements.
- Many US banking giants are exploring similar blockchain-based solutions for RWA settlements.
Japanese banking giant Sumitomo Mitsui Financial Group (SMBC) plans to pilot a stablecoin project in partnership with two American firms. The aim is to rival and bypass the SWIFT payment network.
SMBC will start trials for the stablecoin in the second half of 2025 and plans to launch it by early 2026.
Japan’s SMBC Teams up With Ava Labs and FireBlocks
SMBC is partnering with Ava Labs and Fireblocks to develop its stablecoin. The bank will also collaborate with the Japanese IT company TIS and begin testing in Q4 of this year.
Under the terms of this agreement, SMBC, Fireblocks, Ava Labs, and TIS will work together to create a framework for the issuance and circulation of stablecoins.
This will involve investigating essential technological, legal, and market infrastructure needs in Japan and beyond.
In addition to pilot projects, this collaborative discussion will seek to outline specific use cases for ongoing business applications.
One of the main areas of focus will be using stablecoins to settle tokenized financial and real-world assets (RWAs).
“This highlights the potential for stablecoins to bridge the gap between traditional finance and the digital asset space,” SMBC stated, referring to assets such as real estate and corporate and government bonds.
The stablecoin will be developed with a focus on circumventing SWIFT and allowing corporates to transfer money rapidly and around the clock.
Although SWIFT payments are nearly instantaneous, they are sometimes delayed by international banks with different hours of operation and depend on the recipient’s bank. In contrast, the proposed stablecoin wouldn’t face any similar issues due to the removal of intermediaries and banks.
The Growing Stablecoin Demand
Stablecoins play a key role in the crypto market, acting as an onboarding tool and liquidity provider for exchanges. However, at present, the market is majorly dominated by private players such as Tether and Circle.
With key legislative proposals in the U.S. to make stablecoin use possible in the traditional market, many financial institutions and well-known banking institutions are actively exploring the launch of their stablecoin.
Currently, payment networks such as SWIFT dominate traditional banking networks, with the majority of banks around the globe using them for cross-border settlement.
With on-chain settlement using stablecoins, financial institutions will be able to instantly settle cross-border transactions at a fraction of the cost they are paying today.
Major U.S. banks, such as JP Morgan, are actively exploring the use of stablecoins for settling real-world assets.
The firm currently offers a blockchain-based bank account called Kinexys Digital Payments (previously JPM Coin). Citi also introduced its Citi Token Services. Both use permissioned blockchains.
Prashant Jha is a seasoned crypto journalist based in Delhi, India, with a Bachelor’s Degree in Computer Science Engineering. Passionate about the evolving world of blockchain and cryptocurrencies, he has been a dedicated voice in the industry since 2018. Prashant’s expertise lies in regulatory reporting, where he unravels complex legal and financial developments with clarity and precision. Before joining CCN in 2024, he honed his craft at Cointelegraph, establishing himself as a trusted name in crypto journalism.
His coverage spans major industry events, including the high-profile collapses of FTX, Three Arrows Capital (3AC), and LUNA, offering readers insightful analyses of their regulatory and market implications. Prashant’s technical background enables him to bridge the gap between intricate blockchain technology and its real-world applications, making his work accessible to novices and experts.
Beyond his professional pursuits, Prashant is an avid music enthusiast, often exploring diverse genres to unwind. A sports lover, he has a particular passion for cricket and frequently engages in discussions about the game. His multifaceted interests and sharp journalistic instincts make him a valuable contributor to CCN, where he continues shaping the crypto landscape's narrative.
