About 40 Domestic Banks to Conduct Mutual Remittance Trials Using Tokenized Deposits

Key Points of This Article

• Demonstration experiment to start in August
• Similar digital currency competition is underway in the UK and China

Direct Settlement Without the Zengin System

Approximately 40 banks across Japan will participate in a demonstration experiment for mutual remittance utilizing "tokenized deposits" circulating on the blockchain. According to a report by the Nikkei on the 25th, GMO Aozora Net Bank will lead the initiative, collaborating with DeCurret DCP and ABeam Consulting to commence the demonstration within August.

Resona Bank, Shoko Chukin Bank, and Yokohama Bank will join as observers. The aim is to establish an infrastructure that enables low-cost, immediate settlements 24/7 without using the existing national bank data communication system. DeCurret DCP anticipates practical application by the fiscal year 2027.

What Are Tokenized Deposits?

Tokenized deposits refer to a system where bank deposits are circulated directly as tokens on the blockchain. Unlike stablecoins issued by private companies backed by fiat currency, tokenized deposits are actual deposits, making it easier to apply existing deposit regulations, such as anti-money laundering measures.

Japan Post Bank and Hokuhoku Financial Group's Hokuriku Bank are already aiming to issue tokenized deposits. As the use of these deposits expands in inter-company payments and salary transfers, the need to transfer funds between different banks will arise. This demonstration serves as a proactive effort to establish the necessary payment infrastructure.

Testing Two Methods Amid Intensifying Global Competition

The demonstration will test two methods: one where banks hold mutual deposit accounts and adjust balances according to the remittance amount, and another where remittances are made via stablecoins. The utilization of stablecoins, which three major banks including Mitsubishi UFJ Bank aim to jointly issue, is also being considered.

Similar initiatives are spreading overseas. In the UK, the industry group UK Finance is leading the demonstration of pound-denominated tokenized deposits called "GBTD." China plans to expand its pilot operation area for the digital yuan, indicating a global power struggle over currency digitization.

Japan is said to be lagging behind the US in "on-chain finance," which involves trading deposits and stocks on the blockchain. Mitsubishi Corporation is advancing a demonstration to remit deposits between overseas bases using the infrastructure of the largest US bank, JPMorgan Chase, with practical application expected by the fiscal year 2026.

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