GMO Internet Gains Approval to Launch JPY-Pegged Stablecoin

By Thomas Price Thursday, January 14, 2021

With cryptocurrencies continuing to garner major popularity, many people have been looking to find new ways to invest in them. However, one of the major drawbacks for those who would otherwise invest is the volatility and instability of some cryptocurrencies as their values jump up and down constantly. Stablecoin has been the answer to this in many ways, offering less volatility and more backing. Since its advent, Stablecoin has slowly been making its way through the world, gaining access and approval to launch. GMO Internet Inc. is bringing this to Japan after garnering approval from the New York Department of Financial Services to launch the first-ever regulated and publicly available JPY-pegged Stablecoin. So, what is Stablecoin, what are the details of this Stablecoin launch, and what can be expected in the future of it in Japan?

Stablecoin and GMO Internet

In essence, stablecoin is just a less volatile version of cryptocurrency. It achieves this stability because, unlike other cryptocurrencies, stablecoin is backed by a real-world equivalent like a currency or commodity such as gold. The most common form of backing is fiat money, usually at a fixed 1 to 1 ratio, with the value of the stablecoin being based on the value of the currency. So, for every dollar of traditional currency, there is a singular token equivalent of the stablecoin to match it in value.

Many different types of stablecoins are pegged to various international currencies such as the euro or the United States dollar. GMO Internet is trying to create the first JPY-Pegged stablecoin to be commercially available to the public. This goal was recently achieved with the New York Department of Financial Services approving GMO Internet to establish a limited purpose trust company that will issue this groundbreaking stablecoin.

To win approval to establish this trust, which will be named Trust Company Inc., the company must meet a series of strict requirements regarding cybersecurity programs and federal standards for anti-money laundering and economic sanctions. The trust company will be launching both the JPY-Pegged stablecoin, GYEN, as well as a USD-Pegged stablecoin, ZUSD, which can be purchased and redeemed directly from GMO Trust. Both stablecoins will be 100% fiat-backed at a 1 to 1 ratio to ensure consistent value, availability on global exchanges (among other liquid digital assets), and powered by blockchain-based technology company Ethereum.

When speaking on this new approval, President and CEO of Trust Company Inc., Ken Nakamura, said, “We're breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset. But we are also pioneers and innovators in this space who envision building new applications of blockchain technology that transform our relationship with traditional financial services.”

Implications and Future of JPY-Pegged Stablecoin

The first thing that will happen for the two new stablecoins will be that each cryptocurrency will provide a monthly attestation report that will then be certified by public accountants who will then be able to attest to the availability of the assets and ensure the stablecoins’ value.

The creation and launch of a JPY-Pegged stablecoin is a major step in the cryptocurrencies. Stablecoins offer security for many different investors and serve as a bridge between traditional currency and traditional cryptocurrency due to its fiat backing in the form of currencies and commodities. This new launch adds more traditional currency backing to stablecoins and quite possibly opens up the market to a massive new variety of people.

About the Author

Headshot for author Thomas Price

Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.

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