Sumitomo Mitsui Financial Group, the parent of Japan’s second largest bank SMBC, is planning to issue a stablecoin. It’s collaborating with Ava Labs, the founder of the Avalanche blockchain, as well as Fireblocks, according to a report from the Nikkei.
The bank will work with Japanese IT firm TIS and plans to conduct experiments in Q4 of this year or 2026 Q1, with a live issuance during the following year.
One of the primary use cases is to enable corporates to move money around the world instantly and 24/7, sidestepping Swift. While Swift payments should in theory be almost instant, in reality they tend to be delayed by foreign banks that have different opening hours and rely on the receiving bank crediting the recipient promptly. Additional intermediary banks are often involved, which are not necessary with stablecoins.
Other big US banks are already targeting this use case. JP Morgan has its Kinexys Digital Payments (formerly JPM Coin), a blockchain based bank account. And Citi launched its Citi Token Services. Both use permissioned blockchains.
While Avalanche is a permissionless blockchain, it supports permissioned chains as subnets. For example, its Spruce testnet has institutions as validators. Hence, it remains to be seen which path SMBC adopts.
SMBC’s other blockchain initiatives
Meanwhile, SMBC is also one of the backers of Progmat, the Japanese tokenization platform. It has a stablecoin issuance platform, Progmat Coin. SMBC joined the other big three Japanese banks, MUFG and Mizuho, in an ongoing stablecoin sandwich trial referred to as Project Pax.
A stablecoin sandwich refers to a situation where a stablecoin sits at the heart of a transaction, but it may look like a normal payment to the sender and recipient. The three banks plan for their clients to make trade payments in the usual way, and to use Swift messages. However, stablecoins will replace correspondent banks.
Two years ago, our sources told us that SMBC had joined Partior, the cross border blockchain payment system co-founded by DBS, JP Morgan and Temasek. Partior combines a permissioned blockchain with correspondent banking, removing the typical delays and enabling instant cross border payments. SMBC has not yet confirmed it will participate in Partior. However, the other bank we reported simultaneously – Deutsche Bank – recently said it invested in Partior, highlighting the accuracy of the report.
Hence, SMBC is adopting a multipronged approach to speed up cross border payments using blockchain.
Source: ledgerinsights
