The “Japan Open Chain” will be used in a stablecoin test involving Japanese banks. The test will also involve local governments and private companies.
Japan has taken a major step forward when it comes to stablecoins, with several notable banks testing stablecoin usage on Ethereum-compatible blockchains.
Local media outlets are reporting that domestic banks will issue stablecoins compliant with Japanese laws using a new proof-of-concept.
Banks that will participate include the Tokyo Kiraboshi Financial Group, Minna no Bank, and The Shikoku Bank. The test will initially focus on the issuance and remittance of electronic money, with future plans focusing on a stablecoin system that meets legal requirements. The latter will involve local governments and private companies.
These banks will release their own stablecoins instead of using stablecoins already on the market. The reports note that the stablecoins will function with popular wallets like MetaMask. Furthermore, regulatory authorities in Japan will lift the ban on stablecoins issued overseas this year.
GU Technologies is the company that will develop the system and will use the “Japan Open Chain.” It is completely compatible with Ethereum.
What Is the Japan Open Chain?
Japan Open Chain is an Ethereum-compatible blockchain that GU Technologies has developed in collaboration with Dentsu, Minna Bank, Pixiv, the Kyoto University of the Arts, and CORGEAR. The parties have also released a beta version of the network.
The network makes use of the proof-of-authority (PoA) consensus algorithm, and the group claims that it can record over 1,000 transactions per second. The developers will also research layer 2 scaling solutions in the future. Interestingly, they note that Japan’s interest in web3 makes NFT transactions also on the cards.
Japan Relaxing Stablecoin Laws
One of the report’s most notable statements was that Japan would lift a ban on foreign stablecoins in 2023. As of today, regulatory authorities in the country prohibit crypto exchanges from listing stablecoins like USDT. With the change, exchanges can handle stablecoin trading under “the condition of asset preservation by deposits and upper limit of remittance.”
Meanwhile, the Bank of Japan is focusing on its CBDC. The digital yen is set to experience a pilot program in April. Japan has increasingly turned its attention to this digital asset since development began in 2021. The pilot will focus on the technical feasibility of a digital yet and involve private companies.
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