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Ripple’s gift to Japan-Thailand remittance payments

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The cryptocurrency company Ripple has announced the beginning of a new cooperative effort with SBI Remit to speed up money transactions between Japan and Thailand. The project would enable Thais living in Japan to instantly transfer money home using RippleNet technology thanks to SBI Remit, the leading payment service in Japan. The Thai side in this endeavor will be represented by Siam Commercial Bank.

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Source: Twitter

According to the press release, in one second, the yen will be accessible for withdrawal in Thai baht in Thailand thanks to the implementation, which will enable more than 47,000 Thais living in Japan to transmit money freely using ATMs. Prior to this, a special agent was needed to complete the transaction, which was primarily made with cash.

Nobuo Ando, representative Director at SBI Remit, said,

“It is our duty to continuously search for superior technological solutions to deliver ever improving remittance services for our customers. With the steady rise of remittance flows, we see Ripple helping us open up new revenue potential for our business and a better overall experience for our customers.”

Asia welcomes Ripple with open arms

While Ripple is being fully utilized by Asian nations and businesses, that are integrating XRP into their operations, in the United States, the company is facing significant regulatory pressure from the Securities and Exchange Commission. However, it appears like Ripple chose to commit $100,000,000 to this and place everything in the hands of attorneys after discovering the rules of this “battle” in order to focus all of its resources and attention on its primary business.

In other news, according to a business representative, Ripple Labs Inc., which is involved in a well-known legal dispute with the U.S. Securities and Exchange Commission, is considering buying some of the assets of the defunct cryptocurrency lender Celsius Network. This announcement was made by the firm earlier this week.

Furthermore, according to Ripple’s most recent study, 76% of financial institutions worldwide would employ blockchain technology and cryptocurrencies by 2025, and the business obviously wants a bigger share of that market. From this perspective, it makes the most sense for Ripple to expand into Asia, which thanks to technology is currently one of the world’s most rapidly rising regions.

XRP Rewards Programs Now In Japanese Shinsei Bank

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XRP along with BTC is now part of reward campaigns in a top Japanese bank called Shinsei Bank. According to reports, the newly launched initiative is available for both new and existing customers till Oct. 31.

Users can take home earnings of up to 8,000 Japanese Yen [$60] worth of XRP for availing various services on the platform that includes opening an account, first-time login into the Bank’s portal, making the first deposit, etc.

For instance, opening a new account will carry a reward of a 500 yen [$3.72] coupon. Conducting inter-bank transfers will allow a client to earn up to 2,500 yen [$18.86]. In addition to that, the cash coupons are redeemable in both XRP and Bitcoin [BTC].

Also, it is currently not specified if the Bank accepts any other cryptocurrency apart from XRP and BTC as a reward.

Nevertheless, the latest move is another step forward to expand crypto’s use cases in traditional legacy firms.

XRP Adoption Grows

One of XRP’s major backers- Ripple Labs has spread out largely in Asia, even being adopted by a well-known financial giant. SBI Holdings, a major financial services provider, announced that it renewed its XRP international remittance service using On-Demand Liquidity [ODL]. 

According to a press release, the international remittance service system powered by ODL has been developed into a multi-tenant system that can connect with several remittance-focused firms and crypto exchanges.

Furthermore, the Japanese financial services giant said it is planning to boost Ripple’s On-Demand Liquidity effectiveness in international and domestic remittance. 

SBI’s tapping of the ODL service came a few hours after Ripple released its Q2 2022 financial report. Per the details, ODL adoption reached a peak in the second quarter of 2022, leading to the sale of $408.9 million worth of XRP. 

Ripple, an Enterprise blockchain and crypto solutions provider has also joined hands with FOMO Pay. FOMO Pay is a prominent Singapore-based institutional digital payment solution provider and has become the latest firm to integrate with Ripple’s liquidity solution.

Through this integration, FOMO Pay is planning on using Ripple’s crypto-enabled enterprise technology which is supposed to enable its cross-border treasury flows.

Japan’s New Law Might Assist in Taking Hold of Stolen Crypto

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According to reports, Japan’s Justice Ministry is considering revising an asset seizure statute connected to organized crime to include a provision allowing crypto to be hijacked in such cases.

If the rumors are confirmed, a possible modification of the Act on Organized Crimes and the Control of Proceeds of Crime (1999) will allow law enforcement authorities and judges to seize crypto assets used in illegal activities such as money laundering.

According to statements from news stations like the Yomiuri Shimbun on June 4, the Justice Ministry will need to first engage in discussions with the Legislative Council before moving forward.

Japan’s new seizure law might include crypto

According to the Jiji Press, talks with the legislative Council could begin as early as next month.

Due to the fact that the specific law focused on the seizure of funds/assets from organized crime does not explicitly outline any procedure regarding illegally acquired cryptocurrencies, there is concern that criminals may be able to continue their illicit behavior through their unseized digital asset holdings.

Physical property, monetary claims, and mobile assets such as machinery, cars, tools, and supplies are the only assets that can be confiscated under current legislation, with crypto falling under none of those categories.

The adjustment to the law would next need to be authorized by the cabinet and then endorsed by parliament, and given the nature of such a proposal, it is unlikely to face much opposition.

The study comes just days after Japan’s government passed a bill prohibiting non-banking entities from issuing stablecoins in an effort to reduce system risk and improve consumer safety.

Only licensed banks, registered money transfer agents, and local trust firms are permitted to produce and issue stablecoins under the bill.

Stablecoin bill to enshrine investor protection: Japan

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Last month’s collapse of the TerraUSD token thrust stablecoins into the worldwide spotlight, and Japan became one of the first large economies to build a legal framework around them.

With these move, Japan is no longer just the land of rising sun, it is also the land of rising cryptocurrency regulations.

On Friday, Japan’s parliament enacted a bill clarifying the legal status of stablecoins, essentially establishing them as digital money. According to the new law, stablecoins must be tied to the yen or another legal money and guarantee holders the ability to redeem them at face value.

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Stablecoins can only be issued by licenced banks, registered money transfer agents, and trust businesses, according to the legal definition. Existing asset-backed stablecoins from offshore issuers like Tether, as well as their algorithmic counterparts, are not covered by the Act. Stablecoins are not listed on any Japanese cryptocurrency exchanges.

After the implosion of TerraUSD, which resulted in multibillion-dollar losses from a theoretically safe asset, governments around the world are scrambling to create guardrails around stablecoins, a critical aspect of the cryptocurrency business. According to data gathered by CoinGecko, such tokens have a combined market value of around $161 billion, led by Tether, Circle’s USD Coin, and Binance USD.

Japan yet to regulate stablecoin issuers

In a year, the new legal framework will take effect. In the coming months, Japan’s Financial Services Agency plans to create laws controlling stablecoin issuers.

Once the legal structure is in place, Mitsubishi UFJ Trust and Banking Corp. aims to issue its own stablecoin, named Progmat Coin. The bank, a subsidiary of Mitsubishi UFJ Financial Group Inc., stated that the token will be fully backed by yen held in a trust account and that redemption at face value will be guaranteed.

When the combination of algorithms and trader rewards meant to safeguard the link failed to work as planned in early May, TerraUSD, or UST, began slipping from its intended 1-to-1 peg to the US dollar. The crisis triggered a massive selloff across all cryptocurrencies, ultimately bringing the Terra blockchain, which underpins UST and its sister currency Luna, to a halt.

The collapse harmed faith in other stablecoins as well, with Tether sliding from its dollar peg at one point. Since the event, the value of Tether has decreased by more than $20 billion.

The Terra community voted in late May to support a plan to create a new blockchain that does not include the UST token. The stablecoin is still based on the outdated Terra Classic network and has lost nearly all of its value.

Japan’s Quest For CBDC Enters Phase 2; What’s Next?

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The Bank of Japan’s initiative for a digital Yen has entered its second stage which centered around restrictions on holdings and transactions, as stated in the press release.

The first stage completed in March focused on issues related to the basic functions of a CBDC, including its issuance, withdrawal from financial institutions, and transfers between them.

April marked the onset of the second phase that revolved around implementing measures such as preventing funds from being shifted from bank deposits to a CBDC which it claims threatened financial system stability.

Specifically, the BOJ is examining restrictions on the maximum amount of a CBDC that a person can hold and that can be transferred at one time. Issues related to holders of multiple CBDC accounts at different financial institutions will also be studied.

As per the P.A, BOJ plans to complete the second stage in March next year. It also intends to conduct a pilot test involving the participation of consumers and businesses in the future.

Japan’s Central Bank takes inspiration from Swedish Model

Japan after a careful and thorough analytical approach toward the introduction of its central bank digital currency (CBDC), has decided to take a leaf out of Sweden’s detail-oriented approach to digital currencies.

This was revealed by the Head of the payments system department at the BOJ, Kazushige Kamiyama, who in a recent interview said that the Bank of Japan would follow a model similar to Sweden’s for its central bank digital currency and not China’s as previously believed.

“Japan has a strategy to launch the digital currency slowly and steadily rather than implementing large pilot programs in bulk right from the beginning”, one report said. 

Kamiyana asserted that the gradual expansion that Japan is planning to adopt was inspired by Sweden and is “suited best for the country.” He further said that the design and framework of the central bank’s digital currency need to be considered as part of a system of overall settlement for the future. 

The Bank of Japan governor, Haruhiko Kuroda, said that a decision to issue a CBDC would be made only by 2026.

Japan Tightens Forex Norms To Block Russia’s Crypto Escape Route

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Japan is currently working to revise its foreign exchange law to prevent Russia from circumventing Western financial sanctions through cryptocurrency assets, top government officials announced on 28 March.

Hirokazu Matsuno who is the Chief Cabinet Secretary revealed in a press conference that a revised draft of the Foreign Exchange and Foreign Trade Act would be submitted in the ongoing parliament session.

Even the country’s premier Fumio Kishida voiced his support for the law to be amended in a Monday parliament session, where he stressed the need for coordinated moves with Western allies after attending last week’s Group of Seven summit in Belgium.

A finance ministry official told Reuters that discussions are currently in progress about the proposed amendment, but refused to divulge any further details.

Japan's new Chief of Cabinet Secretary Matsuno Hirokazu announces new cabinet members, in Tokyo

Attempting to provide some clarity, Saisuke Sakai, senior economist at Mizuho Research and Technologies said, The revision “presumably enables the government to apply the law to crypto-asset exchanges like banks and oblige them to scrutinize whether their clients are Russian sanction targets.”

Japan has joined its western allies in slapping sanctions

Following the invasion of Ukraine, the Japanese government has imposed asset-freeze sanctions on more than 100 Russian officials, oligarchs, banks, and other institutions. It has also banned high-tech exports and revoked the most-favored-nation trade status for Russia, which calls its actions in Ukraine a “special military operation”.

Japan, a key US ally has been working in tandem with other nations, calling for stricter action on Russia. After G7 raised concerns in a written statement a few weeks ago, Japan immediately urged its crypto exchanges to not process transactions involving digital-assets subject to asset-freeze sanctions against Russia and Belarus.

The East Asian trading platforms which are among the most tightly regulated exchanges in the world grabbed headlines recently when they complied to implement Financial Action Task Force [FATF]’s Travel Rule on April 1. The Travel Rule essentially requires platforms to get rid of anonymity in crypto transactions in an effort to fight money laundering.

As per Japan’s regulator, the Financial Services Agency, the travel rule will improve transparency on the individuals and entities crypto exchanges deal with, as the government seeks to prevent sanctions-busting efforts.

Japan suspends crypto transactions with Russia and Belarus

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Authorities in Japan instructed its domestic cryptocurrency exchanges to cease transactions with Russian and Belarusian organizations and individuals sanctioned due to Moscow’s invasion of Ukraine. By this move, the East Asian nation joins the likes of Switzerland and Singapore in halting digital asset transactions further isolating Russia from the crypto market. 

In view of Belarus supporting Moscow’s aggression, 19 individuals, including President Alexander Lukashenko, and 15 organizations have been subjected to sanctions.

the latest development has its roots back in early March when Japan’s financial regulator and the country’s industry body announced that they were working on implementing restrictions to prevent Russia from bypassing sanctions through crypto. Japan’s Finance Minister at the time stated,

“We are closely watching the situations of settlements such as crypto assets and SPFS in order to secure the effectiveness of sanctions against Russia.”

Japan, along with the United States and other G7 nations, has frozen the assets of Russian President Vladimir Putin and certain other officials following the invasion.

According to a release, a few days ago, the G-7 leaders said, “We will ensure that the Russian state and elites, proxies, and oligarchs cannot leverage digital assets as a means of evading or offsetting the impact of international sanctions.”

Japan gov to take strict action against violators

As per sources, a total of 30 cryptocurrency exchanges based in Japan have been asked not to transfer assets targeting 44 Russian individuals. A report by Forkast further revealed that the Financial Services Agency and Ministry of Finance announced the penalties against violations.

In the joint statement, the agencies informed that crypto exchanges making unauthorized payments to sanctioned individuals could invite fines up to 1 million yen [$8,500], with individuals facing jail time of three years.

The government also asked the exchanges to monitor crypto-assets and report to financial authorities of any suspicious transactions that may involve those who are subject to the sanctions.

Last year, cryptocurrency transactions over exchanges in Japan jumped 51% in the first 11 months to 103 trillion yen [$900 billion], based on data compiled by the Japanese Virtual Currency Exchange Association. But even as the local industry kept growing, the country’s presence in global crypto markets has been waning and that has further affected due to the current situation. 

Yen-Pegged Stablecoins to arrive in Japan’s largest bank-Mitsubishi UFJ Trust

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Japan’s biggest bank by assets, Mitsubishi UFJ Trust is all set to issue stablecoin tied to the value of the Japanese yen. As per a report published by Nikkei, it aims to bring about a streamlined and accelerated settlement process of securities transactions through the use of blockchain technology for trading and digital assets for payment.

The report also revealed that banks are expected to follow suit in allowing stablecoins in Japan under a revised law that is slated to take effect in the spring of next year.

Further, the bank hopes that the latest initiative will encourage the usage of blockchain in securities trading. For this, the trust bank has been heavily promoting blockchain-based securities in collaboration with SBI and Daiwa Securities.

Stablecoins making huge inroads in Japan’s fintech landscape

Last year Japan planned to impose new restrictions that would only permit banks and electronic funds transfer services to issue stablecoins.

The country’s Financial Services Agency [FSA] first proposed the law took drawing inspiration from a similar US legislation to regulate stablecoins. In November 2021, the US Department of Treasury supported Congress to pass legislation that would prohibit any other entities except banks from issuing the currency.

Just a few days ago, in a report first released by Nikkei Asia today, the news agency informed on the announcement of Japanese trading company Mitsui & Co.’s plans to float a gold pegged cryptocurrency in the country. The currency would be linked to the prices of gold and sold to retail investors via cryptocurrency exchanges.

The asset dubbed ZipangCoin [ZPG] will be available for trading by this month. While Mitsui is preparing for the launch of its gold pegged stablecoin, the country’s effort on its digital currency has completed the first phase.

Update on Japan’s digital Yen

Japan is gearing for the launch of its second phase of pilot testing with Central Bank Digital Currency [CBDC] with the governor hoping that the Bank of Japan might make an official decision on the issuance of CBDCs by 2026.

However, not all seem happy with the decision as recently, a former BOJ official, Hiromi Yamaoka stated that “CBDCs are not a good idea” since he feels that applying negative rates to CBDC might be harmful to the economy.

To issue CBDC, Japan must speed things up, says Minister

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To counter China’s central bank digital currency or CBDC, Japan’s new administration has urged its financial bureaucrats to ramp up efforts towards issuing its own digital yen. A minister of the newly created portfolio of Economic security, Takayuki Kobayashi has stressed to speed up the process in issuing CBDC and went on to term the matter to be a ”national security” level.

While the political efforts have been limited to rhetoric, the Central Bank of Japan [BOJ] is already facing the heat due to its “cautious, baby-step approach” toward issuing the digital yen. As a global front-runner, China has already run a few tests for a possible launch of a digital yuan by 2022.

In contrast to that, BOJ has only kickstarted the first phase of its experiment in April and clarified that it has no immediate plans to issue a CBDC. Besides it categorically said that ‘pilot programs, if any, won’t take place until 2023 at the earliest.’ Now that lackluster stance might see its end as Prime Minister Fumio Kishida has shown serious interest in issues concerning CBDC.

Japan’s CBDC- The journey ahead

Officials at BOJ reassured that China’s plan won’t directly impact the deadline for their CBDC experiments as the main aim of issuing a digital yen is to provide secured, efficient payment and settlement means to the citizens. Sources familiar with the issue, however, sound skeptical and wondered how quickly the Central bank can match up with its European and U.S. counterparts to announce plans for issuing the digital currency.

That being said, the debate over issuing a digital yen might escalate next year as Kishida’s administration lays out plans detailing its economic security roadmap against the backdrop of China’s recent promotion of its digital yuan at the Beijing Winter Olympic Games in February.

A former BOJ board member Takahide Kiuchi said,

It’s clear Kishida’s administration and his ruling party are keen on issuing a digital yen. If China launches a digital yuan next year and Europe’s central bank announces plans to issue a digital euro, that will have a huge impact on Japan and pile pressure on the BOJ.

Japan intends to uphold simplicity in CBDC design

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While governments across the entire globe have been prepping to roll out CBDCs that entail multiple features, Japan intends to keep it simple with the digital yen. An executive from the Bank of Japan noted that simplicity would be a primary feature of the Japanese central bank-issued digital currency.

The fervor around central bank digital currencies [CBDC] hit the roof after China made fast-paced development in the same. While the Asian country was testing out the digital yuan, an array of countries had just started to discuss the prospects of including CBDCs into their system. Nevertheless, numerous countries took charge and have started developing their native CBDC.

Japan is still researching the prospects of the digital yen. However, the central bank of the country seemed to be well aware of what people need. During a recent speech, an executive of the Japanese central bank, Shinichi Uchida revealed the whereabouts of the digital yen.

Japan to keep it “simple” with the digital yen

Since certain payment channels have existed for a long time now, introducing a new one could most likely disrupt the extant situation. Therefore, before rolling out a CBDC, governments have been profoundly working on co-existence. Keeping the same in mind, Uchida suggested that the Japanese CBDC would have a simple design as it requires to be integrated into the private sector payment models.

The executive further added,

“To achieve vertical coexistence, a relatively simple central bank digital currency (CBDC) design is desirable for the private sector to use it as an ingredient.”

The bank intends to move over to the second phase of experiments of the CBDC only in April 2022. During this phase, the bank would be testing out the major features of the coin.

While the central bank of the country still has no plans of rolling out a CBDC anytime soon, Uchida revealed that the bank was in discussions with the private sector. The bank intends to hear out an array of people and their views about introducing the digital yuan. Hence, the bank engaged with the private sector and exchanged views about the imminent Japanese CBDC.