Key Insights:
- Technical testing must demonstrate reliable settlement between yen and won tokens.
- Regulated institutions must join before the network can achieve meaningful commercial scale.
- South Korea needs clearer rules before regulated won stablecoins can support production settlement.
SBI Digital Practice and Nodeinfra are building a blockchain settlement network linking Japan and South Korea. The partners signed an agreement on Aug. 7 to develop Project Musubi using Canton Network infrastructure. The project targets faster cross-border payments without relying on the U.S. dollar as an intermediary.
The first phase will test yen and won payment tokens rather than commercial stablecoins. Regulated digital currencies could follow once legal frameworks support their use in both markets.
Project Musubi Starts With Test Tokens
SBI Digital Practice and South Korea-based Nodeinfra will initially test yen and won-denominated tokens. Neither company has announced a commercial launch date or identified participating financial institutions.
The testing approach reflects different regulatory conditions in Japan and South Korea. Japan already has regulated stablecoin infrastructure, while Korean lawmakers continue developing rules for won-denominated digital assets.
Project Musubi aims to address friction in some Japan-Korea settlements that use the dollar as an intermediary. Such transactions can require sequential settlement and additional processing.
Instead, the network will support atomic payment-versus-payment settlement through Canton Network. Both sides of a currency exchange would therefore settle together.
The planned infrastructure also includes distributed peer netting and member self-governance. These features may lessen settlement exposure and increase the efficiency in the transactions conducted among institutions participating in the settlement.
Split the development roles into SBI and Nodeinfra.
The partners have earmarked their duties according to the market and technical strength.
SBI Digital Practice will build integration layers connecting Japanese financial systems with the network. It will also use SBI Group relationships to support institutional participation in Japan.
Nodeinfra will focus on the settlement infrastructure supporting the Korean side. Its responsibilities include the core protocol, Daml smart contracts, and developer tools. The company will also support Korean financial institutions and custodians joining the project.
This structure gives SBI responsibility for Japanese institutional connectivity. Meanwhile, Nodeinfra handles significant protocol development and Korean onboarding.
Project Musubi remains under development and does not yet operate as a commercial stablecoin payment network. The partners have not named participating banks, exchanges, custodians, or payment companies.
Japan enters testing with a regulatory head start
SBI already has infrastructure that could support future yen-denominated settlement.
The group launched JPYSC through SBI Shinsei Trust Bank in June. SBI describes it as Japan’s first trust-type yen stablecoin. SBI VC Trade began handling its primary distribution on June 24.
However, the Project Musubi announcement does not confirm JPYSC’s use during initial testing. The partners specifically described the first instruments as yen and won test tokens.
SBI Digital Practice itself emerged from a recent corporate restructuring. SBI renamed SBI Security Solutions in June and redirected the subsidiary toward institutional onchain finance. The business now focuses on Canton Network infrastructure designed to connect markets, currencies, and financial institutions.
Ryo Shimotsu, SBI Digital Practice’s representative director, wants Musubi connected with SBI’s wider onchain infrastructure. The company ultimately wants the project to establish a new standard for Japan-Korea payments.
That remains an objective rather than an established market outcome.
Korean Regulation Shapes the Commercial Timeline
South Korea presents the project’s largest regulatory dependency.
Policymakers are developing legislation for won-denominated digital assets under a broader Digital Asset Basic Act. But discussions over key provisions on issuance and circulation still continue.
That uncertainty helps explain the use of test tokens during Project Musubi’s opening phase. The partners intend to introduce regulated stablecoins only when applicable frameworks permit commercial deployment.
No won stablecoin issuer has been identified for the project. Moreover, the companies have provided no timetable for transitioning from testing into production.
The regulatory gap could shape how quickly the network becomes commercially viable. Stablecoins have taken a step further in the direction of regulation in Japan, with Korea just beginning to create its framework.
A Better Asian Settlement Policy
Project Musubi might expand to the Korea-Japan corridor in the future. SBI and Nodeinfra see more currencies, jurisdictions and asset classes entering this infrastructure. But that growth is still a long-term prospect and hasn’t been timetabled.
The short-term goals are more focused. Technical testing is still to be done by the partners, and regulated institutions have to be brought in, as well as the rules on stablecoins in both countries have to be dealt with.
If the deployment is successful, it may enable SBI to be in a good position to play a significant role in the regulated cross-border digital settlement infrastructure in Asia. However, the adoption in the market will require the approval of regulatory authorities and institutional involvement.
For now, Project Musubi represents infrastructure development rather than a functioning stablecoin corridor. Its next phase will show whether blockchain settlement can move from controlled testing into regulated cross-border finance.
