The First Yen Stablecoin Approved by The Japanese Regulator
CryptoBit News Today1 min read
Japan's top financial regulator, the Financial Services Agency (FSA), has granted its stamp of approval to one of the country's first yen-pegged stablecoins.
Under approvals from Japanese regulators, Crypto Garage, a subsidiary of Digital Garage, will run a year-long sandbox trial piloting a delivery versus payment settlement service between yen stablecoins and digital assets on Blockstream's Liquid network. The test represents one of the first yen-backed stablecoin projects approved under the Japanese government's regulatory sandbox framework since its inception.
How It Works
The JPY-Token stablecoin will trade against Liquid Bitcoin (L-BTC), a Bitcoin-pegged token on the Liquid sidechain. Crypto Garage has built a suite of products called SETTLENET on Liquid to enable the trial. The platform supports issuing and trading the new stablecoin, with atomic swaps allowing simultaneous conversion between the JPY-Token and L-BTC.
The SettleNet platform will also enable regulatory authorities to track illicit activities such as money laundering.
Japanese Regulatory Climate
The FSA heavily scrutinizes crypto trading and related firms, establishing a strict framework in 2018 after a massive 526 million unit NEM heist from the exchange Coincheck shortly after the agency reissued a warning about risks of participating in exchange activities. Coincheck had its official license granted earlier this month.
Participation in the year-long trial is restricted to exchanges holding a Japanese Virtual Currency Exchange License, and overall transaction volumes will be capped. The trial is among the first authorized under Japan's regulatory sandbox program, coming after December 2018 Coinhill data indicated that roughly 47.23% of Bitcoin transactions were carried out in yen.
