The GMO Internet Group and Nomura Holdings are looking into ways to introduce new stablecoin products to the Japanese market. A partnership between the GMO Internet Group and Nomura Holdings, a financial services corporation operating in thirty countries, is centred on the issuance of stablecoins in Japan denominated in USD and JPY.
A Nomura Holdings company called Laser Digital Holdings, which provides asset management and trading services for digital assets, will also be a part of the alliance. Stablecoins-as-a-service, regulatory compliance, and traditional stablecoin issuance will be the main areas of focus for the recently announced cooperation. Following the news, CEO of Nomura Holdings Kentaro Okuda said in a press release that stablecoins “will inevitably play an important part in financial markets”.
According to him, the collaboration will “examine the issuance, redemption, and circulation mechanisms of a JPY/USD stablecoin business in Japan.” “This project has the potential to significantly improve the accessibility and innovation of digital assets in the Japanese financial landscape.”
The government of Japan enacted laws in 2022 to create a precise and comprehensive regulatory framework that would control stablecoins. The 2022 bill, which is the most significant, classified stablecoins as non-securities and mandated that their producers register with the Financial Services Agency (FSA) of Japan prior to releasing the tokenized currency equivalents.
The value of stablecoins in Japan must be correlated with an underlying fiat currency, such as the US dollar or the Japanese yen, and they can only be issued by trusts, banking institutions, and licenced money transmitters under the present regulations.
But the Financial Services Agency of Japan is keeping an eye on algorithmic stablecoins, like the doomed TerraUSD project.
A preference for stablecoins backed by real cash reserves has been noted by the financial authorities, which has issued cautions regarding the usage and risks of algorithmic stablecoins. In May 2022, TerraUSD gained notoriety as the stablecoin’s support started to wane and the algorithm was unable to keep the coin’s 1:1 peg to the US dollar.
The progressive decoupling from the dollar peg that preceded the stablecoin’s abrupt price implosion marked the beginning of TerraUSD’s demise. Due to the lack of physical cash reserves by TerraUSD to support the algorithmic stablecoin in the event of severe market volatility, algorithmic malfunctions, or other unanticipated circumstances, the stablecoin’s value crashed to zero, wiping out billions of investors’ capital.