Hong Kong digital asset company, IDA Finance teams up with Japanese banking group Progmat and other firms to develop a stablecoin remittance service between the two regions.
According to a recent press release, IDA and Progmat Inc will also be working together with Japanese blockchain firm Datachain and cross-chain infrastructure provider TOKI to build a proof-of-concept or PoC that enables stablecoin cross-border transactions between Hong Kong and Japan.
The PoC is meant to provide traders with an alternative asset for export-import transactions between the two regions using blockchain technology. It will also identify potential improvements and benefits that can be made to the current trade routes as well as address regulatory and compliance considerations.
The use of stablecoins for cross-border payments, specifically in commodity trade, have long been believed to have significant benefits. Stablecoin transaction usually take less time to process compared to regular credit transfers and can provide payment confirmation in a matter of seconds.
IDA, Progmat, Datachain and TOKI plan to have a user test out the service by performing a cross-border payment request using stablecoins denominated in Japanese yen and the Hong Kong dollar through local off-ramp partners.
IDA will be responsible for maintaining a 1:1 reserve backing for the stablecoins, while Progmat will issue the stablecoins and provide the platform, Progmat Coin. On the other hand, Datachain will develop and implement the technology needed for cross-border stablecoin exchanges and TOKI will lend its cross-chain expertise to the project.
Co-Founder of IDA, Sean Lee cited data from Hong Kong Trade Development Council’s 2023 records, which showed that Japan was Hong Kong’s fifth largest trading partner.
“With stablecoins emerging as a viable alternative to traditional remittance methods, along with stablecoin regulatory clarity from both regions, the potential for growth in this area is enormous,” said Lee in his statement.
In recent months, both Hong Kong and Japan have been pushing for more stablecoin regulations in hopes of increasing adoption. Hong Kong Financial Services Secretary, Christopher Hui said the region will be focusing on tokenization and stablecoins in its efforts to transform into a crypto hub. Hui also introduced a stablecoin bill to the legislative council in December 2024.
Meanwhile, Japan lawmakers continue to push for a crypto reform bill that would allow stablecoins to be backed by short-term government bonds and fixed-term deposits will an upper limit of 50%. The bill is already headed to the National Diet after receiving approval from the Cabinet of Japan.
