'Japan Open Chain' will see three large banks test stablecoin payments
(Kitco News) - Japan has become a hotbed of blockchain-related development recently, and now three major banks in the country have announced plans to issue stablecoins on an Ethereum-compatible blockchain known as Japan Open Chain.
According to a Thursday press release, Tokyo Kiraboshi Financial Group, Minna no Bank and The Shikoku Bank are participating in the experiment using Japan Open Chain, a blockchain network created by G.U. Technologies that utilizes the proof-of-authority (PoA) consensus algorithm and can reportedly process 1,000 transactions per second.
"We will conduct an experiment to confirm that each bank can issue its own stablecoin that can be used in Ethereum wallets such as MetaMask while complying with the Payment Services Act," the companies said.
The test will initially focus on the issuance and remittance of electronic payments and will eventually move toward the creation of a stablecoin system involving local jurisdictions and private companies.
Following the collapse of the Terra ecosystem last May, which was caused by the depegging of the TerraUSD algorithmic stablecoin, Japan prohibited crypto exchanges from listing foreign-issued stablecoins like Tether (USDT) and USD Coin (USDC). In December, reports emerged that the Financial Services Agency (FSA) was reevaluating its ban to possibly permit their use in 2023.
The launch of this new experiment is the latest sign that the FSA is gearing up to allow stablecoins in the Japanese crypto market as long as they meet specific regulatory standards.
G.U. Technologies highlighted that all stablecoins that operate on Japan Open Chain will comply with Japanese regulations. The new blockchain, which is currently in beta testing, was developed in conjunction with Dentsu, Minna Bank, Pixiv, the Kyoto University of the Arts, and Corgear. Each of the banks involved in the project is tasked with creating and releasing its own stablecoin for the experiment.
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Blockchain-based digital payments may only be a matter of time in Japan with the testing of stablecoins on the Japan Open Chain and the ongoing development of a digital yen by the Bank of Japan, which is set to launch a pilot program for its central bank digital currency (CBDC) in April.
Japan now appears intent on becoming a major blockchain hub for the crypto ecosystem. This development follows Monday’s announcement that a group of ten well-known Japanese companies – including Mizuho, Mitsubishi, Fujitsu and Sumitomo Mitsui – are collaborating to create the “Japan Metaverse Economic Zone,” also known as Ryugukoku, which will “enable interoperability between different Metaverse platforms and serve as a new social infrastructure for enterprise digital transformation.”
Former Square Enix executive and JP Games CEO Hajime Tabata will spearhead the collaboration designed to “update Japan through the power of games.” The endeavor is referred to as an “industrial design initiative that utilizes gaming technology and was established by way of each company’s endorsement of the concept.”