Sep 22, 2023 06:00:00

What is Soramitsu, a Japanese blockchain company that supports digital payment systems in cooperation with central banks of Southeast Asian countries?

The National Bank of Cambodia , the central bank of Cambodia, introduced the digital currency Bakong in October 2020 and is working to include people without bank accounts in the financial system. Rest of World, an international media outlet, has written about Soramitsu , a Japanese blockchain company that is collaborating with the Cambodian central bank to develop Bakong and exploring the possibility of introducing central bank digital currency (CBDC) in countries such as Vietnam and the Philippines. reports.

The Japanese blockchain startup behind Cambodia's digital currency - Rest of World
https://restofworld.org/2023/japanese-company-cambodia-digital-banking/

One day in 2016, Soramitsu co-founder and CEO Makoto Takemiya received a message from someone claiming to be an employee of the National Bank of Cambodia, asking him to discuss a pilot project. However, at that time, Soramitsu had only been in business for a few months, and the company was financed by co-founder Takashi Okada 's savings, with income barely enough to cover food, clothing, shelter, and necessary expenses. was. Therefore, he initially suspected that it was a scam.

However, this message was actually from the National Bank of Cambodia. In Cambodia, less than 20% of the people have bank accounts, and many people are unable to access financial services. On the other hand, since the penetration rate of mobile phones is high, it was predicted that an inclusive financial infrastructure could be developed by deploying a digital payment system based on blockchain.

In 2017, Soramitsu signed a project with the National Bank of Cambodia, and the Bakong payment system project began in earnest. Bakon is a system based on the blockchain platform ' Hyperledger Iroha' developed by Soramitsu, and users can use digital wallets, real-time person-to-person remittances, bank account transfers, and QR code payments just by using their phone number. You will have access to financial services such as The person who led the project was then-Deputy Governor (current Governor) of the National Bank of Cambodia, Chea Serey.

And in October 2020, the National Bank of Cambodia officially released Bakong, a “quasi-digital currency” system. Bakong supports remittances in US dollars or riel , and as of February 2023, the number of digital payment system accounts exceeds 8.5 million . In 2022, it has processed transactions worth 12.2 billion dollars (approximately 1.8 trillion yen) and 12.8 trillion riel (approximately 450 billion yen).

On the back of Bakong's success, Soramitsu has become well-known throughout Southeast Asia as a developer of digital payment systems. At the time of writing, we have a technical partnership with Mitsubishi UFJ Trust and Banking and are working on

a project to realize payments between domestic and foreign stablecoins, and with support from the Ministry of Economy, Trade and Industry, we are developing CBDC in Vietnam, the Philippines, Fiji, etc. We are exploring the possibility of introducing it .

However, despite being involved in various international projects, little is known about Soramitsu. Banking sector officials contacted by Rest of World said they knew that Soramitsu was responsible for the Bakon system, but did not know much about Soramitsu itself. 'We were all like, 'What is this company?'' said one Cambodian bank executive.

Zenon Kapron, director of Kapronasia, a Singapore-based fintech specialist consultancy, says that for Soramitsu, a relatively small company, the blockchain industry has low barriers to entry and there are no major competitors in Southeast Asia. He pointed out that the points were a tailwind. 'This is all new business, so clients may be open to using new vendors or companies they don't know much about.'

Mr. Takemiya, CEO of Soramitsu, was born in

San Luis Obispo , California, came to Japan in the late 2000s after an internship at NEC, and later renounced his American citizenship and acquired Japanese nationality. Soramitsu has approximately 150 employees around the world, including Russia and the United States, and also has an office in Switzerland outside of Japan. Although the majority of the company's capital is still equity capital, Mr. Takemiya says that annual revenue in 2022 will be approximately $20 million (approximately 3 billion yen), and profits are increasing.

Soramitsu calls Bakong a CBDC, but Rest of World says, ``More precisely, Bakong is a blockchain-based payment network. 'Bakong is not counted among the 11 CBDCs launched to date.' That said, Anand Yakumar, associate director of digital currencies at the Atlantic Council, said Bakong has been well executed regardless of category.

Stephen Higgins, founder and managing partner of Mekong Strategic Capital, a Cambodian investment company, said: ``Bakong has helped Cambodia provide one of the most efficient and user-friendly payment systems in the world. For a country like this, this is a very impressive achievement.'

Since the success of Bakong, Soramitsu has been approaching all of Southeast Asia with support from the Japanese government, and in particular, in Laos, a demonstration experiment of the digital payment system 'Digital Lao Kip' was conducted in cooperation with the central bank. I am. In August 2023, it was also announced that Cambodian banks will support Digital Lao Keep's QR code payments.

However, not all Soramitsu's attempts have been successful. In 2022, during the economic crisis in Sri Lanka, we pitched the idea of making virtual currency tokens legal tender, but it was not adopted. In addition, the company has pitched Bakon's model to Ukraine, but has not made any progress, and efforts to build a decentralized digital depository for the Moscow Stock Exchange have also failed due to the recent collapse of virtual currencies. An anonymous bank executive told Rest of World that a key test will be whether Soramitsu can expand its business by building on its success in Cambodia.

Mr Higgins said that while Bakong's success in Cambodia was 'transformative', projects in countries such as Vietnam and Fiji were still in their early stages and their success was unknown. “Success will depend on the design that central banks choose,” Higgins said.