The predominant use of stablecoins in Japan has made significant strides, with multiple prominent banks conducting trials on Ethereum-compatible blockchain networks. According to local media sources, the participating banks will issue stablecoins that adhere to Japanese regulations using a new proof-of-concept.
Although many banks like The Shikoku Bank, Minna no Bank, and Tokyo Kiraboshi Financial group have joined the initiative, some notable institutions are missing from the list. However, these banks have a strong track record of community involvement and are well-poised to drive positive change in the crypto industry.
Initially, the tests will concentrate solely on releasing and transferring funds electronically, and plans will include developing a system of stablecoins that meets legal prerequisites. Local government sectors and private companies will also participate in the project’s latter stage.
Introducing Custom Stablecoins
Rather than utilizing stablecoins already available on the market, the participating banks will introduce their stablecoins, compatible with popular wallets such as MetaMask. Additionally, the Japanese authorities have revealed plans to rescind the ban on stablecoins issued abroad later this year.
The system’s development will be overseen by GU Technologies, which will use Japan’s Open Chain, an Ethereum-compatible blockchain created alongside Minna Bank, Dentsu, Pixiv, CORGEAR, and the Kyoto University of the Arts. The network leverages the proof-of-authority (PoA) consensus algorithm and can record more than 1,000 transactions every second.
The developers are researching layer-2 scaling solutions that can increase transaction speed and reduce gas fees, a significant barrier to NFT adoption. As a result, this development could pave the way for increased innovation and growth in the NFT market.
Moreover, Japan proposes to ease stablecoin restrictions in 2023, enabling cryptocurrency exchanges to trade stablecoins under certain circumstances. Meanwhile, the Bank of Japan focuses on its CBDC, which will undergo a pilot program in April.
Japan’s Pilot Project And Digital Currencies’ Global Adoption
Japan has been paying increasing attention to this digital asset since its development began in 2021, and the pilot project will explore its technical feasibility and involve private firms. The project’s success could set a precedent for other countries to follow suit in exploring digital currencies.
Japan’s progress in stablecoin adoption and development indicates a promising future for wider cryptocurrency acceptance. Japan can become a significant player in the global cryptocurrency market with its tech-savvy population and supportive regulatory environment.
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