Japanese banks to launch digital currency backed by bank deposits
A consortium of Japanese corporations, led by cryptocurrency exchange DeCurret, is set to introduce a digital currency, DCJPY, specifically for the transaction and settlement of clean energy certificates by July 2024.
GMO Aozora Net Bank will issue the yen-based coin, with the underlying platform provided by DeCurret. The initial use of this digital currency, from next July, will be by the telecommunication firm Internet Initiative Japan (IIJ) for the settlement of clean energy certificates. These certificates assign an “environmental value” to energy derived from renewable sources, and there are plans to make them tradable using blockchain technology.
The DCJPY tokens will be backed by bank deposits and are designed to interface with bank accounts for seamless transactions. DeCurret indicated that this arrangement leverages banks’ existing KYC and AML systems combined with a traceable blockchain ledger, distinguishing it from typical stablecoins.
A potential benefit of DCJPY is the reduction in payment settlement costs compared to traditional direct debits and transfers. This move by Japanese companies aligns with trends in other countries where digital currencies supported by bank deposits and blockchain technology are becoming more prevalent.
The recently released DCJPY White Paper suggests that the digital currency could complement the central bank’s forthcoming digital currency.
DeCurret has been central to this initiative, guiding discussions within a consortium of Japanese companies, including notable financial institutions like Mitsubishi UFJ Financial Group Inc (8306.T), Mizuho Financial Group Inc (8411.T), and Sumitomo Mitsui Financial Group Inc (8316.T). This group has been deliberating on building a shared settlement infrastructure for digital payments.
Binance Japan is also planning to launch stablecoins denominated in the dollar, euro, and yen in Japan in 2024. The crypto exchange aims to introduce these tokens, and possibly more, through its partnership with Mitsubishi UFJ Financial Group’s trust banking arm.
The recent legal revision in Japan primarily introduces a registration system for stablecoins circulation and reinforces anti-money laundering measures. Additionally, it enables overseas businesses to issue stablecoins in the country through custodians of digital assets.
Japan’s biggest lender, Mitsubishi UFJ Financial Group (MUFG), also unveiled plans to introduce and distribute stablecoins backed by banks on various public blockchains.
In collaboration with blockchain interoperability specialist Datachain and Toki, a cross-chain bridge, MUFG aims to facilitate seamless interoperability of these authorized stablecoins across multiple blockchains using its Progmat Coin protocol.
MUFG’s blockchain-powered platform is designed specifically for the issuance and management of stablecoins that are pegged to the Japanese yen at a 1:1 ratio. With Progmat Coin, the lender provides a secure solution that ensures stability and familiarity for users within the Japanese market.