Japan’s second-largest bank, SMBC, is partnering with Ava Labs and Fireblocks to develop a stablecoin, leveraging blockchain technology for cross-border payments.
By Bhushan Akolkar
Editor Hamza Tariq
Updated
2 mins read
Japan’s second-largest banking institution – Sumitomo Mitsui Financial Group (SMBC) – is working on a stablecoin launch in collaboration with Ava Labs and Fireblocks. This happens as big banking players have started understanding the importance of a fiat-pegged stablecoin, and its future demand, and thus have shown interest in grabbing a piece of its expanding market share.
Avalanche’s parent firm Ava Labs will set the “basis” of the SMBC stablecoin using blockchain technology. On the other hand, crypto security firm Fireblocks will take care of the management system for the tokens.
To execute this project, the banking giant is willing to work with TIS, a local IT firm, to conduct experiments for its stablecoin project in the second-half of this year.
Stablecoins offer banks a way to enhance cross-border payments by lowering transaction costs and eliminating intermediaries, unlike the traditional SWIFT system, which often results in higher fees and delays.
SMBC has been exploring Web3 innovations since 2022 when it launched Token Business Lab in partnership with HashPort to develop blockchain-based NFT services. Later that year, the duo conducted a trial issuance of soulbound tokens–non-transferable NFTs designed for identity verification.
Last year in 2024, the Japanese bank stated that it plans to launch a cross-border pilot project for stablecoin in partnership with two other banking institutions, the Mizuho Financial Group and the Mitsubishi UFJ Financial Group.
Japan has always undertaken a crypto-friendly approach over the last decade and was among the first to introduce stablecoin regulations. In June 2022, its parliament amended the Payment Services Act, classifying fiat-pegged stablecoins as “Electronic Payment Instruments”.
However, the legislation restricted the issuance of stablecoins to licensed banks, registered service providers, and trust companies.
Japanese banks are fast-tracking their stablecoin plans as the industry gains momentum in the United States with the introduction of crypto-friendly policies under the Trump administration.
President Trump has also highlighted the importance of USD-pegged stablecoins and how they can further strengthen the dominance of USD in the global market. As new legislation aims to provide greater clarity on stablecoins in the US, more traditional banks are expected to enter the stablecoin market.
In a recent development, USDC stablecoin issuer Circle also submitted its S-1 filing to the US Securities and Exchange Commission for an Initial Public Offering. The firm plans to list its CRCL stock on the NYSE.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
