Japan’s Crypto Garage to roll out yen stablecoin

Bitcoin infrastructure firm Blockstream, investment firm Tokyo Tanshi, and internet company Digital Garage are collaborating to form Crypto Garage — a new crypto asset payment project that has been granted sandbox status by Japan’s Financial Services Authority and the Cabinet Secretariat.

Sandbox status will permit the evolution of Crypto Garage’s ‘Settlenet’ service — which aims to use Blockstream’s sidechain settlement network Liquid to offer clients a fast and secure way of tokenizing fiat currencies, securities, and cryptocurrencies, starting with the Japanese Yen.

In the one year experimental period provided by the sandbox, the company plans to increase the liquidity available to crypto exchanges in Japan by allowing the simultaneous trading of a Yen-backed stablecoin against Blockstream’s bitcoin-pegged token, Liquid Bitcoin (L-BTC), over the Liquid network.

The technology that enables this — Atomic Swaps — is a method of exchange that uses smart contracts to create a peer-to-peer swap. This eradicates counterparty risk, enables immediate transactions for crypto asset exchanges, and also makes transactions more private and secure.

However, the Settlenet technology also includes functionality that will allow regulatory authorities to oversee transactions. As the official press release states, "Settlenet will provide the regulatory authorities with the functionality to monitor any unlawful trade, including money laundering."

Crypto Garage is the third company to enter Japan’s FinTech sandbox, which was introduced by The Japanese Cabinet Office to encourage startups to enter the banking industry by allowing them to sidestep the country’s strict regulatory framework for a one year period.

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