Nomura Holdings and GMO Internet Aim to Launch Yen and Dollar Stablecoins in Japan
Summary:
Nomura Holdings, in collaboration with GMO Internet Group and Laser Digital Holdings, is planning to issue Japanese yen and U.S. dollar stablecoins in Japan. The partnership encapsulates not just stablecoin issuance but also regulatory compliance and stablecoin services. In 2022, Japan rolled out robust regulations for stablecoin issuance. The laws currently allow only licensed banks, trusts, and money transmitters to issue stablecoins, with a prerequisite for these to be tied to a traditional fiat currency. FSA has expressed concerns over algorithmic stablecoins, exemplified by the failed TerraUSD.
Financial giant Nomura Holdings, with operations in 30 countries, has joined forces with GMO Internet Group with the aim of launching stablecoins linked to the Japanese yen (JPY) and U.S. dollar (USD) in Japan. Laser Digital Holdings, a subsidiary of Nomura dedicated to providing trading solutions and managing digital assets, will also be part of this new alliance. The partnership will concentrate on formalizing stablecoin distribution, ensuring legal compliance, and offering stablecoins-as-a-service. Nomura's CEO, Kentaro Okuda, stated in a post-announcement press release that stablecoins will inevitably become influential in financial markets. He also specified that the partnership will study the dynamics of creation, redemption and circulation of a JPY/USD stablecoin venture in Japan, which could significantly augment the accessibility and innovation in Japanese digital asset space. In 2022, Japan introduced legislation establishing a solid regulatory mechanism to control stablecoins. Notably, the 2022 directive identified stablecoins as non-securities, demanding their issuers to register with the Financial Services Agency (FSA) of Japan before launching their tokenized fiat counterparts. Current laws stipulate that only licensed money transmitters, banking institutions, and trusts are permitted to issue stablecoins in Japan, which must be tied to a traditional fiat currency like the yen or the U.S. dollar. Despite this, the FSA is wary of algorithmic stablecoins, exemplified by the failed TerraUSD. This agency has warned about these types of coins, preferring those backed by actual cash reserves. TerraUSD attracted attention in May 2022 when its credibility was shaken as it could not maintain its one-to-one ratio with the U.S. dollar. The demise of TerraUSD started with it gradually straying from the dollar tie, subsequently leading to a drastic plunge in the stablecoin's value. As TerraUSD lacked tangible cash reserves to underpin the algorithmic stablecoin amid market instability, algorithmic hiccups, or other unpredicted scenarios, its price plunged dramatically, resulted in billions of dollars worth of losses for investors.
Published At
5/27/2024 7:04:54 PM
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