Japan is gearing up for a groundbreaking transformation in the way transactions are conducted and digital currencies are utilized. A consortium of Japanese firms, spearheaded by cryptocurrency exchange DeCurret, is set to introduce a digital currency by July 2024, revolutionizing the landscape of transaction and settlement systems.
DCJPY: The Pioneer Digital Currency
Decurret says the backbone of this digital currency, aptly named "DCJPY," will be provided by GMO Aozora Net Bank. Operating on a network orchestrated by DeCurret Holdings Inc, the yen-based DCJPY aims to redefine payment settlements and create a robust ecosystem for various financial applications.
When discussing the primary use cases for the DCJPY stablecoin, Marisa McKnight, CEO and Co-Founder of Joba Network, highlights the critical role of stablecoins as a settlement layer in the crypto and financial ecosystem.
"The biggest use case for stablecoins is always as a settlement layer. In the world of volatile cryptocurrencies, we need to have a stable asset that can be used for settlement," she emphasized. This would provide a stable pricing mechanism for transactions involving the Japanese yen.
McKnight points out that the creation of a new yen-based stablecoin introduces the Japanese yen to a broader audience. "It introduces the Japanese yen to a whole other group of new people. People around the world are not going to be limited just to relying on dollars. They now have another currency they can trust. I think that's the most important thing because historically, holding yen in non-US bank accounts has been very difficult."
Unlocking the Potential of Clean Energy Certificates
DeCurret points out that DCJPY is primed for use in the settlement of clean energy certificates. This is a concept assigned an "environmental value" to energy harnessed from non-fossil fuel sources. To further expand the horizons of this novel concept, these certificates would be tradeable using blockchain technology.
Backing by Bank Deposits: A New Standard
DeCurret outlines in its white paper that the DCJPY Network will comprise two main components: the Financial Zone and the Business Zone.
The Financial Zone will be dedicated to banks creating digital currency by tokenizing Japanese yen deposits on the blockchain, while the Business Zone will be reserved for transactions.
Additionally, the Business Zone will serve as a platform for issuing non fungible, security, and governance tokens.
The primary issuer of the DCJPY, backed by deposits in Japanese yen, is set to be Aozora Bank. This is a commercial institution operating through 19 domestic branches in Japan.
Consortium Driven Transformation
DeCurret has played a pivotal role in orchestrating discussions among a consortium of Japanese firms that share a collective vision of leveraging digital currency technology. In 2021, DeCurret had previously reported the formation of a consortium involving 70 Japanese companies participating in the DCJPY Network.
Although the white paper refrains from specifying the names of the network participants, DeCurret itself boasts the support of 35 shareholding companies. They include prominent entities such as Japan Post Bank, Mitsubishi, and Dentsu Group.
Moreover, this cooperative endeavor has engaged prominent financial institutions in the establishment of a unified settlement infrastructure for digital payments. Leading the charge are major banks such as Mitsubishi UFJ Financial Group Inc, Mizuho Financial Group Inc, and Sumitomo Mitsui Financial Group Inc. Their participation reaffirms Japan's dedication to pushing the frontiers of financial innovation.
Evolving the Financial Landscape
In response to the impending introduction of DCJPY, McKnight also shares her insights on how this stablecoin could influence the broader cryptocurrency market.
According to McKnight, "It's a very big step forward. I'm optimistic about the introduction of a stablecoin that is not USD based. Circle USDC has been the only single player. I think it's really important that we introduce non-USD backed stablecoins."
She emphasizes the importance of this move for Japan, highlighting its significant position in the global economy. "Japan, in particular, compared to Hong Kong or Singapore, is still one of the largest economies in the world. Bringing on another currency that is so liquid and tradable around the world, especially within Asia, is extremely important because it becomes interoperable with the crypto world."
McKnight goes on to discuss the potential for institutional adoption, saying, "Traditionally, stablecoins have limited use-cases. People take their dollars, [exchange them] for stablecoins, and stay within the crypto [currency] ecosystem. But having institutional backing from a traditional bank is extremely interesting for institutional adoption of [the Japanese] yen. Not just in Japan, but it will grow across other parts of Asia that have lots of trade relations with Japan."
McKnight underscores the significance of DCJPY as a bridge between traditional finance and the crypto world. She notes, "[The Japanese Yen backed stablecoin] is a very necessary or important bridge because this is something that the US cannot do. They've been doing it through a private institution with Circle. I think coming more from banks and regulated institutions introduces opportunities for payments, funds, and it'll bring new use cases as well to the stablecoins."
Promoting Global Connectivity Through Stablecoins
When discussing the impact of the DCJPY stablecoin on cryptocurrency adoption in Japan and globally, McKnight articulates an inspiring vision of a more interconnected world where value and exchange transcend geographical boundaries.
She passionately states, "I believe that this stablecoin promotion, both in Japan and worldwide, would propel our world forward to become more and more interconnected. The world is already very interconnected, but transacting actual value and a medium of exchange is still limited based on where you live."
She emphasizes how the introduction of stablecoins has ushered in a new era where "anyone with a wallet, anywhere" can hold a stable currency. "They're not limited to the job opportunities in their country," McKnight explains. For instance, someone in Nigeria can now earn USDC, a stable asset, regardless of geographical constraints. This eliminates the previous challenges of international transactions, where payments in local currencies posed significant obstacles.
McKnight concludes her insights with a glimpse into the future. She says:
"There's going to be more and more use cases for payments, and stablecoins, and being able to work in a global fashion. If you are a Nigerian influencer who starts to get a Japanese following, or if you're a Japanese NFT project, you're going to be able to unlock a whole new group of people who just have phone devices and are able to do simple tasks or work on the internet. Instead of waiting for months or days, we're entering the age of programmable money. It's going to be instant, real-time payments. Faster settlement times, micropayments will become a lot more prevalent in social media, and we will be using stablecoins to do this."
As Japan steers toward this digital currency revolution, the DCJPY announcement follows a May 2023 revelation by the Bank of Japan. The BOJ announcement highlighted the results of the second phase of BOJ's central bank digital currency experiment. With a final decision on the issuance of a "digital yen" expected by 2026, Japan remains at the forefront of financial innovation.
Simultaneously, players like Binance, Mitsubishi UFJ Trust, and Banking Corporation are exploring the issuance of Japanese yen and foreign currency-denominated stablecoins. As Japan accelerates its drive toward a digital future, these developments could mark a pivotal moment in the global evolution of digital currency.
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Author: Galileo Ferrari