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The first phase of Korea-Japan stablecoin remittance testing has concluded, marking a significant step toward faster and cheaper cross-border payments between the two countries. The trial, known as Project Pax, brought together leading banks and fintech firms from Korea and Japan.
On the Korean side, participants included Shinhan Bank, Kbank, and NH NongHyup Bank, supported by Web3 companies such as Fair Square Lab and Korea Digital Asset Custody. Japan’s delegation featured Shoko Chukin Bank alongside fintech innovators Progmat and Datachain.
At a project briefing in Tokyo on September 10, participants confirmed that the technical verification was successful. The process involved converting Korean won into a won-pegged stablecoin domestically, transmitting it across a blockchain network, and converting it into Japanese yen on arrival.
Kbank reported that the system outperformed traditional channels: “The transactions were processed faster and at lower cost compared to existing international remittance systems,” the bank noted in its summary.
The Korea-Japan stablecoin remittance initiative is viewed as a testing ground for how digital assets could reshape global payments. Unlike traditional remittance systems that rely on costly correspondent banking, the trial used blockchain infrastructure for only the cross-border leg, while retaining domestic banking networks.
This hybrid approach, participants argued, offers efficiency without entirely displacing established systems. Another key innovation was the adoption of an open API architecture. Organizers said this would allow not just major banks but also secondary institutions and corporations to join the ecosystem in future phases.
“The open design of this model ensures scalability, enabling broader participation and reducing systemic bottlenecks,” — Project representative, briefing in Tokyo.
Despite technical success, the Korea-Japan stablecoin remittance project faces serious regulatory questions. Korea currently lacks a framework to govern stablecoins, creating uncertainty about how foreign currency-backed tokens entering the country should be classified.
Participants also flagged technical issues such as managing real-time exchange rate fluctuations during transfers.
“These issues have been identified as matters that will need to be addressed through future consultations with regulatory authorities and bank foreign exchange departments,” — Official, Fair Square Lab.
The absence of clear regulatory guidelines in both Korea and Japan has prompted caution among observers. Industry experts note that while the trial demonstrates strong technical feasibility, regulatory clarity will be essential before the system can be deployed at scale.
The consortium plans to advance to the second phase of testing for Korea-Japan stablecoin remittance. This stage will emphasize real-time interoperability with global payment systems such as SWIFT, while expanding the platform’s use cases to include low-value transfers and small business payments.
“We will continue preparing to take a leading role in future Korea-Japan cooperation on stablecoin remittances,” — Spokesperson, Shinhan Bank.
Analysts suggest that if regulatory challenges are resolved, the model could serve as a blueprint for other cross-border corridors in Asia. The trial’s early success highlights the growing interest among traditional banks in leveraging blockchain for international remittances, an area long dominated by high costs and delays.
For now, the initiative stands as a proof of concept. The next phase will determine whether the Korea-Japan stablecoin remittance model can transition from experiment to a reliable payment solution for consumers and businesses across borders.
