Cash money, in its traditional paper form, is gradually becoming an artifact of the past. Leading the charge in Asia into the digital frontier is Soramitsu, a Japanese blockchain startup, is moving into the growing ecosystem of central bank digital currencies (CBDCs) and fiat-pegged stablecoins. Their latest endeavor aims to bridge the major economies of Asia, using Cambodia’s groundbreaking CBDC as the cornerstone.
Pioneering an Asian Payment Network
The project creates an ambitious goal: to knit together Japan, India, China, and Southeast Asia into a cohesive digital payment network. To achieve this, Soramitsu will harness the power of Cambodia’s CBDC and integrate it with stablecoins pegged to real-world currencies.
It’s not Soramitsu’s first foray into the CBDC arena. The company played a pivotal role in developing Cambodia’s Bakong and Laos’ Lao kip, projects which received notable attention from Nikkei. Launched in 2020, Cambodia’s Bakong isn’t just a local phenomenon. The digital initiative, which permits users to transact through a mobile app using the Cambodian riel or U.S. dollar, has expanded its footprint, with Malaysia, Thailand, and Vietnam joining its user base. A staggering 8.5 million users have adopted Bakong, processing an impressive $15 billion in payments by the end of 2022.
Soramitsu’s current blueprint aims to cast a wider net. According to recent reports, the firm is actively pursuing avenues to facilitate cross-border payments in India, China, and Laos, with Japan poised to be a significant player in this nascent digital network.
A Glimpse into the Future
Imagine a Thai consumer eyeing a product on a Japanese e-commerce platform. Through Soramitsu’s envisioned system, they could make a QR code-based payment using a dollar-denominated Bakong. This digital currency would seamlessly transition to a yen-denominated stablecoin, making international transactions virtually effortless.
One standout advantage is the anticipated reduction in transaction fees. Traditional interbank payment networks often come with hefty charges, a challenge that stablecoins, with their ability to bypass these networks, are poised to counteract.
Collaborations and Partnerships
In a move to bolster its capabilities, Soramitsu has assembled an elite team comprising the Tokyo-based digital services firm, Vivit, and the Tama University Center for Rule-making Strategies. The company’s sights are set on integrating with major e-commerce players to broaden its reach.
Furthermore, to fortify its exchange infrastructure, Soramitsu is joining hands with esteemed financial institutions like Japan’s Mitsubishi UFJ Trust and Banking.
A Digital Economy Beckons
As the world grapples with the evolving landscape of money, initiatives like those pioneered by Soramitsu are blazing a trail towards a digital economic future. By creating avenues that dissolve traditional boundaries and fees, they are heralding a new age where money flows as effortlessly as information does today.
But an entirely digital economy comes with risk and going entirely digital comes with a lot of risks, just ask anyone living under an authoritarian regime. We’re watching closely as CBDCs develop around the world.
