Hong Kong and Japan Team Up to Explore Stablecoin Use Cases for Cross-Border Trade

IDA Finance, Progmat, Datachain, and TOKI have joined forces to develop a proof of concept (PoC). The initiative makes use of blockchain technology to optimize international trade payment procedures.

Hong Kong and Japan are joining forces to explore the use of stablecoins for cross-border trade.

The initiative, which is being carried out by IDA Finance, Progmat, Datachain and TOKI, will see the partners come together to develop a proof of concept (PoC) that leverages blockchain technology to streamline international trade payment processes.

This will be done with the aim of making transactions faster and safer, and eliminating the need for parties to compromise on transparency.

The partnership is aiming to highlight the tremendous business interest in finding alternative banking solutions.

While traditional systems are time-consuming and financially expensive, this project sets out to highlight how, through their stablecoin collaboration, the partnership can provide quicker and cheaper ways for businesses to carry out import and export transactions.

This initiative also benefits from strong institutional backing, as Hong Kong has been rolling out its own regulatory framework for stablecoins, which it completed in December 2023. Japan also completed its own regulatory framework for stablecoins in April 2023.

The Hong Kong Trade Development Council (HKTDC) ranks Japan as the fifth-largest trading partner of Hong Kong for the year 2023, highlighting the importance of their economic partnership.

Testing Commences for Stablecoin Payments in Japan and Hong Kong Trade

The presentational entry of stablecoins in this economic category would enable simplified foreign exchange payments and lead to operational cost reduction.

Discussing the potential of this project, Sean Lee, Co-Founder of IDA, stated that stablecoins could revolutionize international trade by offering low-risk payment systems that outpace conventional financial systems.

To assess the system, the test user must carry out cross-border payments through stablecoins in Japanese Yen and Hong Kong Dollars. The process is overseen to ensure the seamless transfer of digital assets parallel to fiat currency between financial institutions.

For optimal legal and regulatory compliance, IDA will be establishing sound financial practices with complete reserve support at 1:1 backing ratios for all stablecoins. The issuance and supervision of stablecoins will fall under Progmata, while Datachain will develop the technical framework for secure transactions. TOKI will act as a connector to enable blockchain networks to interact with each other.

This initiative showcases the growing reliance of the global trade industry on digital assets. The successful execution of this project could pave the way for stablecoins to expand beyond their current boundaries into broader international commercial use, facilitating swift and secure cross-border payments.