Shinhan, NongHyup, Kbank join experimental stablecoin initiative for global trade

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Shinhan Bank, NH NongHyup Bank and Kbank have joined a Japan-led international project to create a blockchain-based system for cross-border payments aimed at fixing long-standing problems in global money transfers, the banks said Thursday.

At the center of the initiative, called Project Pax, is the use of stablecoins — digital assets that try to keep a steady value by linking to government-issued currencies like the U.S. dollar or to physical assets like gold.

Tether (USDT) and USD Coin (USDC), both pegged one-to-one to the U.S. dollar, are among the most widely used stablecoins.

Project Pax is led by the three largest banks in Japan where stablecoins are already legal.

Stablecoin-based transfers are expected to drastically cut fees and processing times compared to traditional cross-border payments.

Major banks from multiple countries are collaborating to test stablecoins in remittances, currency exchanges and offshore settlements, with the goal of proving their speed and efficiency in simplifying global transactions.

Participating Korean banks aim to assess the feasibility of using a won-based stablecoin for cross-border trade remittances ahead of domestic legislation. They will specifically examine whether such transactions can be carried out smoothly in real-world financial environments.

Based on the findings, they aim to propose a model tailored to the local market.

“Through our participation in the pilot project for stablecoin-based remittances, we hope to evaluate the assets’ practical value and identify diverse use cases once regulatory frameworks are established,” a Kbank official said. “We remain committed to driving innovation in the financial sector, particularly in the area of digital assets.”

The project began in March and is scheduled to run for about three months through May.