The GMO Internet Group and Nomura Holdings, a financial services corporation, have partnered to issue stablecoins denominated in Japan’s Japanese yen (JPY) and U.S. dollars (USD).
Laser Digital Holdings, a subsidiary of Nomura Holdings that provides asset management and trading solutions for digital assets, will be a part of the partnership.
Stablecoins-as-a-service, regulatory compliance, and traditional stablecoin issuance will be the focal points of the recently announced partnership. Following the announcement, Kentaro Okuda, CEO of Nomura Holdings, issued a press release in which he predicted stablecoins “would inevitably have a significant impact on financial markets.”
He stated that the collaboration would “examine the mechanisms of issuance, redemption, and circulation of a JPY/USD stablecoin enterprise in Japan.”
“This endeavor possesses the capacity to significantly augment the accessibility of digital assets and foster innovation within the financial domain of Japan.”
The Japanese government enacted legislation in 2022 to establish a transparent and comprehensive regulatory framework overseeing stablecoins.
Significantly, the 2022 legislation classified stablecoins as non-securities and mandated that issuers of stablecoins register with the Financial Services Agency (FSA) of Japan before distributing tokenized fiat equivalents.
Stablecoins may only be issued by licensed money transmitters, banking institutions, and trusts in Japan, following existing regulations. Furthermore, the value of the stablecoins must be pegged to an underlying fiat currency, such as the U.S. dollar or the Japanese yen.
Nevertheless, Japan’s Financial Services Agency has scrutinized algorithmic stablecoins, including the unsuccessful TerraUSD. The financial regulator has cautioned against the use and risks of algorithmic stablecoins, highlighting the preference for fiat-backed stablecoins.
TerraUSD garnered significant attention in May 2022 due to a decline in confidence in the stablecoin and the algorithm’s inability to uphold its 1:1 peg to the U.S. dollar.
TerraUSD’s demise commenced with a gradual decoupling from the dollar anchor, precipitating the stablecoin’s price collapse.
TerraUSD’s failure to maintain tangible fiat reserves to support the algorithmic stablecoin in the face of unforeseen circumstances, such as severe market volatility or algorithmic malfunctions, resulted in a complete collapse of the stablecoin’s value, causing investors to lose billions of dollars.
