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 GMO-Z.com 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 GMO-Z.com 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
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.