Providing new value based on bank guarantees and Mitsui & Co.'s creditworthiness Digital Asset Markets

I understand that your main business, including your future plans, is the UT (Utility Token) business, ST (Security Token) business, and DP (Data Protection) business. First, please tell us the details of the cryptocurrencies such as ZPG, ZPGAG, and ZPGPT, and the benefits to users.

Nishimoto Kazuya (hereinafter, Nishimoto): As a premise, I see UT, ST, and DP as the first stage up to 2030.

On top of that, I believe that our special crossing engine, which is based on the securities system technology of Intertrade, one of our largest shareholders, and our variable issuance token technology, which is optimal for real assets (RWA), give us the greatest advantages that other companies do not have.

DAMS' three main businesses are the first stage until 2030

Nishimoto: Our crossing engine has the major feature of being able to adjust liquidity regardless of the difference in scale when comparing small transactions of 1 yen by investors with large transactions in the huge London market accessed by issuers in the ZPG series.

In other words, it is a structure that enables centralized trading of 1 yen retail transactions up to large wholesale transactions, and while there are usually cases where slippage occurs in such processing, we have set slip loss to zero.

At the same time, wholesale transactions require a clearing function, and we have implemented processing based on the DVP (Delivery Versus Payment) concept.

In addition, with RWA tokens, if investor demand increases, a mechanism is required to theoretically increase the issuance amount infinitely as long as there are real assets, so the ZPG series adopts our RWA token issuance mechanism that makes this possible.

In addition to the structure that reduces the risk of outflow, the ZPG series is a commodity-backed stable coin, and since the issuance amount is variable, it supports multi-address processing with a smart contract as a measure to prevent issuance rights from being taken away.

This can be used to tokenize a variety of real assets, the issuance of which will become more active in the future, and inquiries are currently on the rise.

From the perspective of the DP business, crypto assets are a product based on an unprecedented concept in which the data itself has value (data owner = rights holder), so we recognize that platform providers handling crypto assets bear a great responsibility for data preservation.

To fulfill that responsibility, as part of our data preservation business, we have also independently developed "Digital Shelter," an unprecedented data preservation software with unprecedented strength.

What benefits does your UT business bring to users?

Tsuguo Kato (hereinafter, Kato): It is often mistaken, but the ZPG series is not a type of cryptocurrency that has underlying assets managed by trust. The ZPG series has a bank guarantee on the outstanding balance, which is the basis of its creditworthiness.

The issuer is a 100% subsidiary of Mitsui & Co. (Mitsui & Co. Digital Commodities (hereinafter, MDC)), so its creditworthiness alone is considerable, but the safety of the bank guarantee in the event of an unforeseen incident with the issuer is a major advantage in that users' assets are protected.

In addition, the actual value does not decrease due to trust-related expenses, and the price is always the same as the value of the target assets such as gold, silver, and platinum, without deviating from the value, making it a token with high price transparency.

Furthermore, at present, it can be held for a small amount of 100 yen, and technically it can be used for settlement in 1 yen units. There are plans to make it possible to trade on various chains in the future, so I think it can be said that it is an RWA token with asset properties and high reliability that can be held and transferred on the blockchain in the future.

Could you please elaborate a bit more on the fact that it is technically possible to use this card for payments in increments of 1 yen?

Nishimoto: At present, microtransactions starting from 1 yen cannot be realized because of issues with the tax system. In Japan, the "buying and selling" of crypto assets and "payments" are under the same tax system, so the tax system for investments is also applied to payments, reducing efficiency at the time of payment.

Stablecoins are originally intended to achieve price stability, but there are problems if they are subject to the same tax system as other highly volatile crypto assets.

There are also technical issues. When large amounts of money, in the hundreds of millions of yen, are moving, the current concept of a wallet will cause problems. In the future, when the advent of quantum computers makes it easier to carry out address attacks, a mechanism that acts as a safe called a treasury on a cross-chain will be necessary.

Is it difficult to solve this problem using CBDC?

Nishimoto: The biggest advantage of CBDC is that interest rates can be adjusted directly. Current market interest rates are passed through banks, but with CBDC, they can be manipulated directly. The reason we do not introduce CBDC is that it may make banks unnecessary.

On the other hand, the current situation where only stable coins are issued is half-baked, and considering the costs, we believe that issuing CBDC is inevitable. In order to circulate large amounts of funds, for example, technology is required to inflow and store them in a safe place such as a treasury.

In light of these current circumstances, we already have the technology to move funds directly and in a closed manner without using the All-Bank Net.

Kato: To add, in order to settle in units of 1 yen, not only are there technical issues arising from the current tax system, but the existence of retailers who accept them is also essential.