Table of Contents
Public chain of issuance and high affinity with Web 3.0.
It makes no sense if we don't create something safer, more convenient and more efficient than banks. The next vision of JPYC, the pioneer of domestic stablecoins.
--In light of the implementation of the revised Funds Settlement Law, what are your thoughts on how stablecoin will be used in Japan in the future?
Noritaka Okabe (Okabe): I think that the first stage will be the use and spread of stablecoins in Web 3.0, in other words, among NFTs and blockchain games. In the medium to long term, I think it will also spread to corporations that use NFTs to buy and sell, and I hope that this will happen. Beyond that, stablecoin will be used in the form of automated transactions when trading with DAOs and AI.
--What advantages do you think individuals and businesses will enjoy by using stablecoin compared to existing finance?
Okabe: In comparison to bank payments, stablecoin payments are safer and more convenient. There are risks with bank payments, such as special fraud, and in terms of efficiency, there is the problem of rising fees. In terms of convenience, it is also difficult to handle through programmes. Stablecoin will become more efficient and easier to handle in the future as standards around the world are standardised.
In terms of areas such as bank reliability, there is currently an increase in fraudulent money transfers. In the past, banks have explained that they are safe because they have properly verified the identity of the person sending the money and the money is transferred between them. Unfortunately, however, we are now in an era where identity documents such as driving licences can be forged, and there are a great many fictitious accounts.
If bank-style identity verification is collapsing, then it would be more efficient to use the blockchain to capture the flow of money.
--With the majority of people not having wallets, what do you think about onboarding people who don't have wallets?
Okabe: While the penetration rate of wallets has to be as high as that of bank accounts to be called widespread, I think there are two main ways.
One is for the three major mobile carriers to install it as standard equipment. The other is for companies like Apple and Google to make it a standard feature. More to the point, killer apps are on the way. If a killer app like Pokémon Go appears, which is installed by people all over the world, it will spread quickly.
--In this environment, what are the advantages of the Japanese market and what initiatives can be taken only in Japan?
Okabe: Japan was one of the first countries in the world to enact regulations into law, and a law on stable coins came into effect in June this year. We are about two years ahead of other countries.
If operators communicate well with the FSA, they can avoid the risk of being sued suddenly and can operate safely. It is also more efficient because there are no sudden lawsuits as in the US. In the future, foreign operators will also consider issuing stable coins in Japan.
The new law also makes it possible to issue stable coins in foreign currencies, so I think some operators will issue stable coins linked to Asian legal tender, for example.
The majority of the world's financial transactions are conducted in US dollars, and while the Chinese yuan is gaining in presence, the Japanese yen has been in a situation where its presence has been diminishing. However, the more stablecoins issued under Japanese regulation, the more the presence of the Japanese yen will increase.
--What are the regulatory hurdles for foreign operators to issue stable coins in Japan?
Okabe: There are two ways to go in terms of licensing: one is to work with a trust bank. The other is a structure like that of Circle and JPYC, which issue USD coins (USDC). This is a way for overseas operators to invest and develop their business by investing in operators who are well aware of Japanese regulations. Whichever pattern is used to issue the coins, money will flow into Japan.
--As the regulatory development of crypto assets and stable coins progresses globally, what are the issues you are most concerned about at present?
Okabe: There is currently a growing expectation that taxation on transactions between crypto assets will become more relaxed. The number one concern is that, for example, transactions between crypto-assets such as bitcoin are not taxed, but transactions between crypto-assets and stablecoins may be taxed. I would like to see the same treatment when trading with stable coins as with crypto assets.
--How do you plan to develop JPYC in the future in response to the revised Funds Settlement Law that has recently come into force?
Okabe: There is a possibility of updating the conventional pre-paid system in about two years' time following the revised Funds Settlement. We will upgrade the system so that it can be used for blockchain games and other applications.
Meanwhile, we are also preparing to join hands with fund transfer operators to enable JPYC to be converted back into Japanese yen more quickly. We are also preparing to register for a new trading licence called the Electronic Payment Instrument Trading Business.
Specifically, we are preparing to exchange stable coins compliant with Circle's standards, such as USDC and EUROC, for example, by converting USDC into Japanese yen when the money is transferred to us.
--What are your future plans with Circle?
Okabe: I feel that the executives at Circle, including CEO Jeremy Allaire, really care about JPYC. It is an important partner for us and we are trying to deepen our relationship more.
In fact, a key feature of JPYC is that we use the same format as Circle in smart contracts. Naturally, Circle is undergoing various developments and enhancing its functionality.
JPYC is ready to support that functionality as it is. In conjunction with the licensing, we will continue to link JPYC with the functions currently being developed by Circle.
--JPYC has announced a stable coin project called JPY Sea as part of its ‘Blue Economy’ project, what can you tell us about this activity?
Okabe: JPY Sea is a challenge to launch a bank-type stable coin using the financial institutions of the cooperative in Aogashima. I have actually joined the fishermen's cooperative and am making preparations.
After I moved to Aogashima, I realised that the only financial institution on the island is the post office, so even if I wanted to buy a boat, for example, there is no way for me to borrow money.
JPYC's mission is to ‘break through social dilemmas’ and I personally wanted to work on solving social problems on Aogashima, where no financial institutions exist. I also wanted to apply my knowledge from Aogashima to JPYC's stable coin issuing business, which led me to launch the JPY Sea project.
However, banking regulations are very strict and currently we can only issue on practically private chains. If the regulations are relaxed in the future and bank stablecoins can be issued as a public chain, we would like to launch at that time.
The regulations will change at some point, so we want to be ready so that we don't get left behind. As long as we are funded, I don't think it's good enough to say that we can no longer launch because the regulations have changed, so we want to be ahead of the curve so that we can respond in any way we need to.
--It is expected that financial institutions and other private companies will develop stablecoins in the future, but what advantages do you think the JPYC has? What advantages do you think the JPYC has and how do you plan to deal with stablecoins in the future?
Okabe: I am aware that many existing issuers of stablecoins use banks. However, under the current regulations, banks cannot issue on the public chain, which makes them very incompatible with Web 3.0.
With regard to the Web 3.0 area, JPYC-type stablecoins based on the funds transfer industry have an advantage. The fact that we can align our standards and use them on the public chain is also a key feature.
Also, we are smaller in size than our competitors, but that is why we can operate at very low cost as we do not waste any funds. Stablecoin is absolutely essential for innovation in Japan through Web 3.0 and NFT.
Currently, Japanese payments are subject to high fees. We don't just want to launch a stablecoin, we think we have to launch something that is as easy to use as possible in a form that really doesn't charge any settlement fees.
It makes no sense if we don't create something that is safer, more convenient and more efficient than banks, and we think that JPYC is the closest thing to that. It is our great social responsibility to build it with zero fees as much as possible. We will continue to challenge to achieve this.
Noritaka Okabe
Representative director of Japan's leading stable coin company JPYC KK, specialising in the boundary areas of technology, finance and innovation law, drawing on his experience as CTO and CFO. With the mission of ‘breaking through social dilemmas’, he aims to realise a society where safe and free economic activities can be promoted by seamlessly connecting the web3 and the real world with the Japanese yen stable coin JPYC.
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