In order to put in place a payment system that complies with regulatory criteria, 3 Japanese banks are contemplating a stablecoin trial.
3 Japanese Banks are Planning to Test Out Stablecoins
The participating banks include Tokyo Kiraboshi Financial Group, The Shikoku Bank, and Minna no Bank, according to a news release issued on Thursday. On the Japan Open Chain, the group intends to implement a system created by Web3 infrastructure company GU Technologies. The news release, which provided information on the stablecoin payment system used by Japanese banks, stated:
“Tokyo Kiraboshi Financial Group, Minna no Bank, and The Shikoku Bank will participate in this demonstration experiment, and stablecoin-type electronic money will be issued and remitted on Japan Open Chain through the stablecoin issuance and management system developed by the Company. In the future, we will implement a stablecoin system that meets legal requirements and promote efforts to popularize stablecoins such as business-to-business remittances and general consumer use through demonstration experiments involving local governments and private companies.”
In short, the three banks concurred that asset-backing on the Japan Open Chain would be ensured by a tried-and-tested financial institution stablecoin issuing scheme. For instance, the Ethereum blockchain is fully interoperable with the public blockchain that complies with all Japanese legal requirements.
Advantages to Issuers & Users of the Japanese Banks Stablecoin Program
The stablecoin experiment anticipates using stablecoins as community currencies and as payment options that support Web3. The participating institutions also look for new means of payment and remittance between people and businesses in Japan and overseas. The SWIFT Network and Zengin Net services in the area may be replaced by this development.
The Shikoku Bank, Minna no Bank, and Tokyo Kiraboshi Financial Group‘s proposed stablecoin program also directly benefit issuers and users. Stablecoin issuers gain from higher settlement and exchange fee income as well as new chances to make use of payment data. Also, the growth of bank deposit accounts may result in higher investment earnings for issuers like banks and trust banks.
Adoption of Stablecoin
With growing cryptocurrency popularity, Japan has gradually shifted toward the use and issue of stablecoins. Following Terra‘s collapse in 2022, the Japanese parliament established a set of stablecoin-focused regulations on investor protection. Tokyo also wants to permit the listing of stablecoins produced outside of Japan on local exchanges. Expected “international” stablecoins include Tether (USDT) and Dollar Coin (USDC).