The Cabinet Secretariat of Japan has given its approval to a stablecoin pilot application made by a startup, Crypto Garage with the proof-of-concept period scheduled to take place within the next year according to an official announcement by the firm on Monday.
With “official authorization” now secured, Crypto Garage revealed they created a new application known as SettleNET which will facilitate the trial process of the Yen-pegged stablecoin.
As per the announcement, the SettleNET solution was built on a Bitcoin sidechain (Liquid Network) developed by a fellow crypto startup, Blockstream and is made available for free to licensed Japanese crypto exchanges who join the trial.
Additionally, the deployment of the stablecoin (JPY-Token) on the Liquid Network means that it would trade against the Liquid BTC (L-BTC), a bitcoin-pegged token used by Blockstream to run its platform.
However, to ensure that no difficulties arise with this procedure, the startup said it would use atomic swaps to carry out the conversion of the stablecoins. The result would be a “rapid, secure and confidential transfer of the crypto assets while eradicating counterparty risk” according to Crypto Garage.
Another essential feature of the proposed JPY-Token stablecoin is that regulators will have access to data on the network which is useful for tracking illicit trade such as money laundering.
The next twelve months will reveal whether the project qualifies to join the growing number of stablecoins that witnessed a 1032% adoption rate in November. These forms of cryptocurrencies are also expected to play a vital part in the next level of crypto industry growth alongside security tokens.
Meanwhile, we reported in December that U.S based project, Basis, shut down after it failed to clear some regulatory hurdles with it’s proposed stablecoin model. Although crypto regulatory efforts in Japan and the United States differ, Crypto Garage will hope to see success with the JPY-Token.