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Stablecoin will contribute to the mass adoption of crypto assets.
XRP leisure, which combines all functions, will change the current payment domain.
--In light of the implementation of the revised Funds Settlement Act, what are your thoughts on how stablecoins will be utilised in Japan in the future?
Emi Yoshikawa: In the US, stablecoins have been used mostly for crypto investment and speculation, but over the past couple of years there has been a gradual increase in use cases based on actual demand and in daily settlement. Examples include e-commerce payments, international money transfers and trade finance.
Stablecoin issuers are currently earning huge investment profits due to the high US dollar interest rate, which is obviously not sustainable, so they are investing their profits in expanding the stablecoin ecosystem.
To give a concrete example, the US company Circle is actively developing its own stablecoin, USDC, for money transfers, corporate treasury and developer platforms. Stablecoins are also being used as a matter of course in the Web 3.0 industry and DAOs.
In Japan, unlike in the US, no investment profit can be expected in the first place, so operators are probably struggling with their business models. However, it is precisely because there is no investment profit that they are actively looking for use cases. It is hoped that this will lead to the creation of use cases for stablecoins originating in Japan.
It depends on how it fits in with regulations, but for my part, I think it should not only be used for use cases closed to the domestic market, but should also be used for international transactions in the future, where the advantages of blockchain can easily be demonstrated.
--What do you think are the advantages of using stablecoins?
Yoshikawa: There are various advantages, but in the case of public chain-based stablecoins, they serve as a bridge between real assets and the crypto world.
For example, if there is an option to reward users with points or pay for sales in the marketplace in stablecoin, as a business this can be done more quickly and at a lower cost than through existing payment methods, while from the user's perspective it can be a It can be a gateway to crypto.
In terms of distributing small amounts to a large number of people, cryptos and stablecoins are very useful. Once people who have never been exposed to crypto are in possession of stablecoin, it can lead to the use of various Web 3.0 projects from there. In leading more people into the world of crypto, stablecoin lowers the barrier to entry.
--Ripple launched the Ripple CBDC Platform this year, which is dedicated to CBDC and stablecoin development. What was the purpose of this initiative?
Yoshikawa: Ripple launched the Ripple CBDC Platform in May this year.
It is said that 90% of the world's central banks are currently considering CBDC. Ripple's knowledge of blockchain and industry leadership, honed through more than a decade of experience, has attracted the attention of central banks in many countries for CBDC use cases.
It has developed a range of solutions to utilise blockchain in the private sector and, in addition, CBDC has created a private version of public and decentralised XRP leisure to provide a platform on which it can be safely and securely used in a private environment. CBDC is a private platform.
This CBDC issuance platform can be used comprehensively for minting and management of currency tokens and can also be applied to stable coins.Countries that have so far announced cooperation on CBDC include the Kingdom of Bhutan, the Republic of Palau, Hong Kong, Montenegro, among others.
--What are the strengths of XRP Leisure in the stable coin space?
Yoshikawa: The first reason why XRP Leisure is suitable for stablecoins is that it is optimally designed for payments.
It offers fast settlement with finality in 3-4 seconds, low settlement costs and scalability. Furthermore, it is said to be the first decarbonised blockchain among the major blockchains.
It is also attracting attention because it combines the functions for issuing, managing and controlling tokens as a ‘protocol function’, which means that it can be issued securely using existing protocol functions without the need to deploy smart contracts.
This means that developers are not exposed to the risks of developing smart contracts and can develop them using already existing secure open source functions, which is a win-win situation for both the developer and the user.
Furthermore, the system is characterised by features that facilitate detailed management and control by the issuer based on compliance requirements, for example, controlling which accounts can receive issued tokens or freezing the balance of specific accounts. In addition, it is possible to set settings such that only KYC'd accounts can receive the tokens.
We believe that the ability to enable such controls at the blockchain protocol level will be crucial for financial institutions to issue stablecoins in the future, and that demand for such controls will increase further.
On the other hand, there is still a lack of awareness about XRP leisure. We are working to make it better known around the world, and we would like to explore its use in Web 3.0 use cases together with Japanese operators and users who are active in Web 3.0.
--Please tell us how Ripple will deal with stablecoins in the future, and what areas you will focus on.
Yoshikawa: XRP Leisure is a proven chain with a long history in operation since 2012, when it was created as the world's first ‘multi-asset blockchain’.
The vision is to realise a world where various assets are tokenised on XRP Leisure and frictionless transactions are possible, in other words, an ‘internet of value’. As legal tender tokens, stablecoins play a very important role in the world of the Internet of Value.
In fact, before the term stablecoin was popularised, an equivalent concept to stablecoins had existed on the XRP leisure since 2012. Stable coins in US and Australian dollars have already been issued on the XRP Leisure. It is expected that stable coins in various legal tender currencies around the world, including the Japanese yen, will be issued in the future, and tokens will be exchanged through the DEX to increase liquidity.
By utilising the pathfinding functionality of the XRP leisure, even minor currencies can be easily exchanged from one particular stablecoin to another, which can be applied to cross-currency transfers.
I believe that the movement to issue stable coins will accelerate in the future, not only in Japan but around the world, and I hope that the XRP leisure will be effectively utilised in that case.
As Ripple, what we can contribute to Web 3.0 in Japan is that we are connected to the world. Domestically produced blockchains and other products are emerging, but we cannot deny the possibility that they will become Galapagosised under the current circumstances.
On the other hand, we have a network with the rest of the world. Ripple wants to be a bridge between Japan and the rest of the world.
Emi Yoshikawa
Emi Yoshikawa is a Vice President at Ripple's San Francisco headquarters, where she is responsible for strategy, business operations and joint venture partnerships. She is also an external director of SBI Remit, Japan's largest overseas remittance company, and was named one of the 100 most influential women in business in the San Francisco Bay Area by the San Francisco Business Times in 2021. She holds an MBA from Harvard Business School and a Chartered Financial Analyst (CFA) qualification from the CFA Institute.
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