Soramitsu Explained
Soramitsu is a Japanese blockchain startup & Fintech innovator, Soramitsu is exploring new CBDC applications with a new project on the cross-border payment system for Asian nations & at present Soramitsu is Asian. The G20 (Group of 20) consists of 19 nations & the European Union, the most recent G20 Summit took place in India where the Indian Prime Minister Narendra Modi called for global co-operation on the formulation of cryptocurrency regulations, a presidency note August 1 was released by India & on the presidency note that India released August 1 India included their input relating to the global framework for cryptocurrency which India has in fact been advocating for some time before the recent G20 Summit took place in India & the presidency note released by India is in alignment with the guidelines written by the Financial Stability Board, the United Nations Financial Action Taskforce who are the creators of the September 1 Travel Rule enacted by the UK's Financial Conduct Authority & the International Monetary Fund (IMF). India's Prime Minister Narendra Modi said that emerging technologies such as cryptocurrencies should be globally regulated. Where does Soramitsu fit into the picture you might ask? Soramitsu seeks to target India meaning that Soramitsu would in fact provide the solution that Indian Prime Minister Narendra Modi seeks which is the global regulation of cryptocurrency. Soramitsu with their CBDC expertise focus on linking different CBDCs ensuring that each country maintains their own CBDC system & for instance in the future if Soramitsu was to deploy the digital Euro then Soramitsu would link the digital Euro with the Cambodian Bakong CBDC & potentially the digital Yuan & yet the European Union would still maintain their digital Euro. Soramitsu are contributors to the SORA network & the Polyswap DEX & Soramitsu aim to explore ways to use the public, permissionless SORA network for the purpose of the cross-border issuance & settlement of CBDCs along with token swapping on Polyswap.
The Cambodian Bakong CBDC Project, Soramitsu Geo-Targeting of Southeast Asia & the Potential Likelihood of Soramitsu Geo-Targeting Outside Southeast Asia
Cambodia's Bakong project was launched in 2020 as a public-private initiative permitting Cambodian citizens to make in-store purchases using the local Riel fiat currency or U.S dollars via a mobile application & since the launch of the Bakong CBDC project in 2020 adoption of the Bakong project has expanded into Malaysia, Thailand & Vietnam & Japanese blockchain startup & Fintech innovator Soramitsu is renowned for their CBDC expertise & their involvement in the Bakong project & in late 2022 the Bakong project boasted 8.5 million users & was reported to have handled approximately $15 billion in financial transactions & according to the report Soramitsu plans to target other Southeast Asian nations such as China & India but ultimately will Soramitsu's plan be to geo-target Europe which includes the UK & even geo-target Canada? Possibly.
Soramitsu's Plans
As a part of the Bakong CBDC project Soramitsu plans to establish a Japanese stablecoin exchange for regulated stablecoins in Japan, regulated stablecoins in other countries & for CBDCs which would permit currency conversion from diverse nations according to the report which would pique the interest of the UK Financial Conduct Authority who disdain their citizens' engagement in Decentralized Exchanges in light of the recent enactment of the Travel Rule, for instance if a Cambodian user of the site wants to make a purchase from a Japanese e-commerce site then the user of the site who is based in Cambodia would need to make a dollar-denominated Bakong purchase & convert the dollar-denominated Bakong to a Yen-denominated stablecoin to go ahead & proceed with the purchase from the Japanese e-commerce site.
What Are the Features of Soramitsu's Planned Cross-Border Payment Network?
An international money transfer using a traditional brick & mortar bank uses SWIFT (Society for Worldwide Interbank Financial Telecommunication) & goes via existing interbank payment networks to reach the recipient, for instance, from some major international airports you may not be able to get a direct flight to a specific destination and you may need to fly to one destination & from there take another different flight to get to your final destination which is similar to how SWIFT works, the SWIFT network does not make the international money transfer but what the SWIFT network does is it sends payment orders between institutions using what's called SWIFT codes & when you use a bank for an international money transfer fees are levied by the correspondent banks & the recepient banks & if the SWIFT transfer involves two currencies brick & mortar traditional banks apply poor exchange rates & pocket the difference and sending an international money transfer using a traditional brick & mortar bank via the SWIFT network is costly because the SWIFT transaction needs to go through intermediary banks each intermediary bank will levy their own fee & as the consumer that's why you end up paying surcharges. Traditional brick and mortar banks are willing to pay a specific price for a currency & sell that currency for a specific price & the mid-point of the purchase price & the selling price is the mid-market rate or fair market price but traditional brick and mortar banks set their own exchange rates & as the consumer you never pay mid-market rate or fair market price using a traditional brick and mortar bank for an international money transfer, but, Soramitsu's planned cross-border payment network eliminates the need for the SWIFT network & Soramitsu's planned cross-border payment network reduces transaction fees which are levied by interbank payment networks & this would be enabled by Soramitsu via the use of regulated stablecoins which can be transferred internationally within the Southeast Asian region without going through existing interbank payment networks which levy their own fee.
The Digital Euro Opens a Door for Soramitsu Entry into Europe
The E.U (European Union) June 28 announced their proposed legislative blueprint for a digital Euro & the aim of the proposed digital Euro is to make the digital Euro a widely accepted & easily accessible form of payment keeping in mind that the Bank of Canada has previously stated that they will issue CBDC if it becomes widespread & the aim of the E.U Commission is making the digital Euro widely accepted which I presume that the E.U Commission aim to make the digital Euro widely accepted implies that the aim of the E.U Commission is not only to make the digital Euro a widely accepted payment in North America & Europe but to make the digital Euro a widely accepted form of payment in Southeast Asia in addition to making the digital Euro an easily accessible form of payment & one route for the E.U Commission to take to accomplish their aim is to work with Soramitsu who possess the ability to deploy the digital Euros on their cross-border payment network & users of the Soramitsu cross-border payment network in Cambodia who have the mobile application would be able to access the digital Euro & make digital Euro payment payments & a user of Soramitsu in Spain would be able to access Bakong CBDC & make a payment using Bakong & a Soramitsu user based in Spain travelling to the United States would additionally be able to make an in-store purchase & have the ability to pay in U.S dollars. Where Soramitsu has an advantage is Soramitsu would work with the E.U Commission & follow the E.U Commission legislative blueprint for the proposed digital Euro which makes Soramitsu an asset to the E.U Commission.
The Travel Rule
The Travel Rule created by the United Nations Financial Action Task Force June 2019 & passed into legislation & enforced in the UK July 2022 was enacted in the UK September 1 but Germany, Switzerland, the Netherlands, Estonia, South Africa, Singapore, Canada & even the United States are countries that have adopted the Travel Rule along with the UK. August 17 the Financial Conduct Authority (FCA) in the United Kingdom enacted the Travel Rule which the FCA aimed at Virtual Asset Service Providers (VASPs) that are based in the United Kingdom what the FCA requires is VASPs based in the United Kingdom collect information, verify information & share information relating to crypto asset transfers but according to a statement made by Chanalysis chief marketing officer Ian Andrews back in April 2022 co-ordination of cross-border exchange of information between VASPs at the onset will be a hard problem to solve. Does the solution lie in Soramitsu? Absolutely. Because Soramitsu is a cross-border payment network & looking at Soramitsu's track record Soramitsu are working with Mitsubishi UFJ Trust & Banking & Soramitsu have teamed up with the Tama University Center for Rule-Making Strategies & the Travel Rule which was first introduced by the FCA August 1 would mean that Soramitsu would be willing to team up with the United Kingdom's FCA & there would be no need for VASPs to coordinate cross-border exchange of information since as a cross-border payment network Soramitsu alone possesses the capability of co-ordination of cross-border information exchange & Soramitsu would be capable of collecting information, verifying information & sharing information & what this would mean is right now there are VASPs that are based in the United Kingdom that are non-compliant with FCA rules & a possible & potential Soramitsu & United Kingdom FCA partnership if that ever happens would imply that all the FCA would need to do then is tell non-compliant VASPs & even compliant VASPs they are no longer needed because Soramitsu alone would co-ordinate cross-border information exchange as a cross-border payment network. Additionally Soramitsu's aim of establishing a Japanese stablecoin exchange for regulated stablecoins in Japan, regulated stablecoins in other countries & for CBDCs permitting currency conversion from diverse nations would make Soramitsu a centralized, global multinational cross-border payment network & crypto asset transfer information collector, verifier & sharer which is what the United Kingdom's FCA are seeking.
Inbound crypto asset payments to inbound recipients from a VASP in an outside jurisdiction that has not implemented the Travel Rule means that the sender must make a risk-based assessment to determine if the payment is to be approved or declined & the same applies to United Kingdom citizens sending crypto asset payments to recipients outside the United Kingdom.
The Travel Rule is the enforcement of rules relating to Anti-Money Laundering & Counter-Terrorist activities 'on-chain' & Soramitsu are willing to be compliant with the rules & go the extra-mile by working in partnership with the rule-makers of the Travel Rule which would be the United Nations Financial Action Task Force & keep in mind the recent G20 Summit in India the presidency note India released is in alignment with the United Nations Financial Action Task Force & the Indian Prime Minister Narendra Modi shares the same view of the United Kingdom's FCA of crypto asset regulation & furthermore Soramitsu are working on cross-border payments for India & China's digital Yuan CBDC keeping in mind China's key role in the United Nations & the United Nations Financial Action Task Force. How does this affect North America? The Travel Rule to reiterate is the enforcement of Anti-Money Laundering & Counter-Terrorist activity on-chain rules & for instance Canadians are familiar with the infamous Vancouver Model where Chinese fentanyl gangs were able to clean or wash dirty cash from the proceeds of fentanyl sales using British Columbia casinos & Canada has adopted the Travel Rule.
Soramitsu Partnerships
Soramitsu in the process of building the cross-border payment network has teamed with the Tokyo-based digital services company Vivit & the Tama University Center for Rule-Making Strategies & Soramitsu is seeking to form partnerships with e-commerce sites & for instance after the eBay UK & PayPal agreement ended this opens up an opportunity for a possible future Soramitsu-eBay UK agreement.
Soramitsu seeks to target China meaning that since the Soramitsu cross-border payment network mobile application would seek to deploy the digital Yuan, given the fact that China is aggressively pushing their CBDC & seeks to mandate e-commerce merchants to incorporate the digital Yuan China the way China would enact this would be to eliminate the other options leaving Chinese e-commerce merchants no other option but Soramitsu & potentially Soramitsu would be one way for China to mandate e-commerce merchants to incorporate the digital Yuan
The Financial Conduct Authority Travel Rule Enactment, The E.U Commission Announcement of Digital Euro Blueprint & The G20 Summit in India Present an Opportunity for Soramitsu
The September 1 FCA enactment of the Travel Rule serves as an indication of future enactment of mandatory CBDC incorporation & all cross-border financial transactions in CBDC & Soramitsu as a Japanese blockchain startup & Fintech innovator possesses CBDC expertise providing a cross-border payment system that plans to deploy the Bakong CBDC & potentially the digital Yuan and potentially the digital Euro. Central banks embrace expertise & invest in expertise & since Soramitsu possesses CBDC expertise (keeping in mind Cambodia's Bakong CBDC adoption has extended into Malaysia and the Bank of Canada has previously stated that they will issue CBDC if CBDC adoption is widespread) this requires investing in CBDC expertise & Soramitsu seek to partner with e-commerce sites & were involved in Cambodia's Bakong CBDC & with this in mind, who would the Bank of Canada seek out in order for e-commerce merchants in Canada to incorporate CBDC payments? Soramitsu, because if the Bank of Canada issue CBDC then Soramitsu aim to use the SORA network for the purpose of cross-border issuance of the Bank of Canada CBDC.
Does Soramitsu Pose a Dangerous Threat?
Soramitsu are potentially a highly prized-asset to global governments, central banks, cryptocurrency regulators and centralization whilst Worldcoin is a threat, Soramitsu 100% pose a serious threat to decentralization. Could Soramitsu work with Worldcoin? Absolutely a future possiblity, because in examining Soramitsu's track record they seek partnerships & Worldcoin would be a potential asset for Soramitsu to build the infrastructure for their cross-border payment network. Soramitsu may be seen as an unlikely threat to decentralization in North America due to Worldcoin & PayPal stablecoin viewed as a bigger threat to decentralization in North America, but Soramitsu are subtle & underestimated. Soramitsu has the potential & capability to expand outside Southeast Asia if they choose to & eventually seriously threaten decentralization even in North America.
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