Shinhan Card and SBI units to test yen stablecoin card payments under new MOU

South Korean card issuer Shinhan Card will test card payments using yen-denominated stablecoins with two SBI Group companies. Japanese crypto exchange SBI VC Trade said in a notice on Oct. 21 that it and SBI XDC Network APAC had signed a memorandum of understanding (MOU) with Shinhan Card to build a "blockchain-based global payment ecosystem." According to Shinhan Card, the signing took place on Oct. 20 at SBI Group's Tokyo headquarters, attended by Shinhan Card CEO Park Chang-hoon and SBI VC Trade President Tomohiko Kondo, among others.

Paying by card with a yen token

A stablecoin is a token pegged one-to-one to a fiat currency. The three companies will run proof-of-concept (PoC) trials to examine whether digital assets, including yen-denominated stablecoins, can be linked to in-store payments, and to assess the user experience, transaction process and technical and operational structure. SBI VC Trade said the work would explore the commercial viability of new digital payment services and business models. Shinhan Card outlined the following key tasks.

• A yen stablecoin card payment service
• Wallet-to-wallet (W2W) payments using yen stablecoins
• Cross-border trade settlement
• Exploring participation in the XDC Network's node ecosystem

Shinhan Card said the card payment pilot would test whether Japanese visitors can pay in much the same way as they would with a conventional card, and would check whether stablecoin payments operate safely from an anti-money laundering (AML) and fraud detection system (FDS) standpoint. The companies did not say which yen stablecoin they will use or when testing will begin. SBI VC Trade said specific details would be announced in stages.

Why the XDC Network is part of the deal

SBI XDC Network APAC is a joint venture set up in December 2023 by SBI Holdings and TradeFinex Tech, the United Arab Emirates-based company behind the XDC Network. The XDC Network is a blockchain designed for trade finance and enterprise use, and the joint venture promotes XDC-based trade finance solutions in the Asia-Pacific region. SBI VC Trade said the venture and Shinhan Card will cooperate on developing XDC Network infrastructure and its ecosystem, and jointly study how digital-asset payment services and next-generation payment models could be applied. The three companies plan to extend cooperation to international payments such as trade settlement and to look for ways to connect existing cross-border remittance methods with digital-asset infrastructure.

XDC trades on SBI VC Trade but is not listed on the Korean won markets of Upbit or Bithumb. At 7:33 a.m. KST on Oct. 22, XDC traded at $0.03476 on Bybit's spot market, up 7.4% from 24 hours earlier. Its 24-hour range was $0.03214 to $0.036.

SBI's yen stablecoin has 20.1 billion yen outstanding

SBI Group already runs a yen stablecoin: JPYSC, a trust-type yen stablecoin issued by SBI Shinsei Trust Bank and distributed by SBI VC Trade. According to SBI VC Trade, about 20.1 billion yen of JPYSC was outstanding as of Sept. 7, and under Japan's amended Payment Services Act, which took effect on June 1, 1 billion yen of the backing assets began to be invested in short-term government bonds. JPYSC is classified under Japanese law as a "Type 3 electronic payment instrument," and adding about 6.9 billion yen in applications for SBI VC Trade's JPYSC lending service brings the total to about 27 billion yen. The amended law allows up to 50% of a trust-type stablecoin's backing assets to be held in government bonds or time deposits maturing within three months. SBI has said it aims to use JPYSC for domestic and cross-border remittances and payments, onchain foreign exchange markets and settlement of tokenized assets.

The MOU notice does not mention JPYSC by name, however. According to CoinDesk, JPYSC can currently be used only within SBI VC Trade accounts and cannot be moved to external wallets, and circulation on public blockchains depends on legal, tax and regulatory approval.

Shinhan's earlier tie-ups with Solana and Visa

This is not Shinhan Card's first stablecoin payment trial. On April 30, it signed an MOU with the Solana Foundation on stablecoin payment technology and agreed to run a pilot this year simulating payments between customers and merchants on the Solana testnet. The tasks also included verifying the stability of non-custodial wallets, in which users control their own assets, and researching a "hybrid finance" model that uses oracles to link real-world transaction data to the blockchain. At the time, Shinhan Card said it would consider launching actual services once the relevant regulatory framework was in place. Shinhan Financial Group also signed an agreement with Visa in August on digital assets and AI-based payments.

Shinhan Card is a major South Korean card company with about 20 million cardholders. A company official said of the agreement that it aims to "strengthen the technical foundation for Web 3.0 payments and settlement, including stablecoins, through a range of cooperation projects." The three companies plan to discuss further Korea-Japan payment and settlement cooperation based on the pilot results.