Lee Yeon-woo is a financial journalist at The Korea Times. Her wide range of reporting includes policies, macroeconomics, stock market, companies and even crypto. She is passionate about connecting the dots in Korean finance and making it easier for foreign nationals to understand. Based on her previous experience as a national reporter, she also has a keen interest in social issues within the sector, including gender equality and ESG. Your tips and insights are always appreciated. You can send them to yanu@koreatimes.co.kr.
Korea-Japan stablecoin remittance trial succesfully concludes 1st phase
Executives from companies participating in Project Pax, a cross-border stablecoin remittance initiative between Korea and Japan, pose after a briefing in Tokyo, Sept. 10. Courtesy of Kbank
By Lee Yeon-woo
Korean participants in Project Pax said Tuesday that they had successfully completed the first phase of technical verification for a cross-border stablecoin remittance initiative between Korea and Japan.
On the Korean side, participants included major banks such as Shinhan Bank, Kbank and NH NongHyup Bank, alongside Web3 companies including Fair Square Lab and Korea Digital Asset Custody. The Japanese side was represented by Shoko Chukin Bank and fintech firms such as Progmat and Datachain.
The organizations held a project completion briefing in Tokyo on Sept. 10 to share the outcomes of the initiative.
The verification process involved converting Korean won into a Korean won-pegged stablecoin domestically, transferring it via blockchain infrastructure, and then converting it into Japanese yen upon arrival. The stablecoin was applied only to the cross-border segment of the remittance, while the existing domestic banking network was retained.
Kbank reported that the stablecoin-based transactions were processed faster and at a lower cost compared to traditional international remittance systems.
It also highlighted the benefits of using an open API (application programming interface) architecture, as it enables broader participation not only by banks, but also by secondary financial institutions and corporations.
Despite the technical success, regulatory uncertainties have emerged as a significant hurdle.
Korea currently lacks a regulatory framework governing stablecoins, raising questions about how foreign currency-denominated stablecoins entering the country should be treated. Participants also identified technical challenges related to handling real-time exchange rate fluctuations.
"These issues have been identified as matters that will need to be addressed through future consultations with regulatory authorities and bank foreign exchange departments," said an official from Fair Square Lab.
The consortium plans to move into the second phase of verification. It will focus on achieving real-time interoperability through integration with the SWIFT network, as well as expanding use cases to support low-value remittances.
"We will continue preparing to take a leading role in future Korea-Japan cooperation on stablecoin remittances," a Shinhan Bank spokesperson said.