(Kitco News) – The tokenization of fiat currencies, also known as stablecoins, appears to be the “killer application” of blockchain technology that has captured the attention of corporations such as Sony Bank. The banking and financial unit of the Sony Group Corporation has initiated a proof-of-concept (PoC) pilot to issue a fiat-pegged stablecoin on the Polygon blockchain.
According to a Thursday report from local media outlet Nikkei, Belgium-based blockchain company SettleMint has partnered with Sony Bank on the trial, which aims to assess the potential benefits of stablecoins, such as reduced payment and remittance fees, and explore ways to adopt them in Sony’s gaming and sports intellectual properties.
The trial will also explore potential legal issues that arise when transferring Japanese yen-backed stablecoins and other fiat-backed digital currencies within Japan's regulatory framework.
The framework for stablecoins, which went into effect in June 2022, was created to ensure user protection following the collapse of the Terra/Luna ecosystem and the TerraUSD stablecoin. The regulation requires local stablecoins to be linked to the yen or another fiat currency and guarantees that holders can redeem them at face value.
The PoC is expected to last for several months.
This move into the stablecoin space aligns with Sony Group’s recent efforts to expand its Web3 footprint, including a patent request filed by its video game division to adopt non-fungible tokens (NFTs) for enhanced flexibility in utilizing in-game assets.
If successful, the trial could pave the way for broader adoption of digital currencies within Sony's diverse business operations, potentially giving the conglomerate a competitive edge in the rapidly evolving Web3 landscape.
Aside from this PoC, Sony is also collaborating with Startale Labs, a core developer of Astar Network, to build its own public blockchain network. That project, which Startale CEO Sota Watanabe confirmed on Thursday, is now entering the execution phase, signaling Sony's long-term commitment to Web3 innovation.
Sony is not alone in exploring the launch of a stablecoin in the Japanese market. In September 2022, Binance Japan partnered with local bank MUFG to study the issuance of fiat-pegged stablecoins. Last November, Circle, the issuer of USDC, collaborated with SBI Holdings to investigate the circulation of USDC in Japan.
And on Tuesday, Hokkoku Bank, a regional institution in Japan's Ishikawa Prefecture, announced the launch of “Tochika,” Japan’s first-ever stablecoin backed by bank deposits.
These stablecoin developments in Japan come on the heels of several other notable developments in the sector. This includes an announcement from XRP issuer Ripple that the firm is planning to launch a stablecoin backed by US dollar deposits, short-term US government treasuries, and other cash equivalents, while PayPal announced it will now allow U.S. users to fund money transfers to friends and family abroad using USD converted from PayPal’s stablecoin, PayPal USD (PYUSD).
