Japanese Companies Unveil Plan for Yen-based Cryptocurrency

A consortium comprising 70 Japanese companies has unveiled its plan for a yen-based cryptocurrency in 2022. The group published this information in a whitepaper released by its secretariat on Thursday.

Several high-ranking Japanese companies including, Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group are on the project. According to the project progress report, the group has been working behind the scenes for a while.

What the group is proposing for the yen-based cryptocurrency is similar to what banks practice. To ensure the stability of the Japanese digital currency, banks deposit capital as collateral to minimize fluctuation in the currency price. It is also similar to what obtains in stable coins like USDT and BUSD. It was this collateral backing USDT that we previously reported that Tether loaned to the crypto lending platform, Celsius.

According to the project pipeline, the group intends to pilot-test the currency in another few months. The consortium also unveiled plans for a beta version of an NFT marketplace by 2022.

The Need for a Digital Strategy in Japan

Though similar, the yen-based cryptocurrency initiative is separate from the Bank of Japan’s moves to launch a digital yen. Whether by the apex bank or the DCF, there is every reason for Japan to pursue a digital strategy.

Japan and the Japanese are known for their cash fondness. A report in 2018 suggested that about 80% of all retail transactions in the country. This underscored the country’s cash dependence.

Should Japan successfully develop a yen-based cryptocurrency, it will revolutionize digital payments in the country. However, the regulatory environment in the country is a limiting factor. Japan has been known to place strict measures on its financial markets, including crypto investments.

CBDCs amid Growing Mainstream Cryptocurrency Adoption

Many individuals continue to throw away their fear of cryptocurrencies. Despite its volatility, the number of crypto holders increased in the last few years. Consequently, many countries are looking to create their digital currencies. Like Japan, many countries are in different stages of testing or launching their CBDC.

As The Coinrise previously reported, China, the United States, and many other countries are exploring the potential use of CBDCs. According to JP Morgan, these CBDCs can help save up to $100 billion in transaction costs.

Will the Digital Currency Forum achieve a digital currency before the Bank of Japan? It remains to be seen what the case will be.