Japanese regional bank Hokkoku has made waves by becoming the first in Japan to introduce a stablecoin backed by bank deposits. The development has left Japanese crypto enthusiasts wondering about the potential pros and cons. In addition, the utility of the stablecoin is being questioned about.

Japan Bank Launches Tochika Stablecoin

The initiative is taken owing to the success of their Tochituka app, launched last year in partnership with Suzu City government. The app allows citizens can to earn and spend Tochipo points at select local stores. Moreover, existing Hokkoku bank account holders can now utilize the same app to load up their Tochika stablecoin.

This stablecoin is secured by deposits and can be utilized for spending convenience at participating merchants. Furthermore, the move is groundbreaking as Japan is a country where cash still reigns supreme.

Hence, Hokkoku aims to entice retail businesses by offering a competitive merchant rate of just 0.5% for cashless transactions through the app. Additionally, the bank seeks to persuade companies issuing paper gift certificates to transition to the digital realm by embracing point-based transactions facilitated by the app.

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Future Endeavours In Japan

Looking ahead, Hokkoku Bank plans to introduce person-to-person payments within the app by the year’s end. Furthermore, it aspires to attract other banks within Ishikawa prefecture to join its initiative. In addition, it expressed ambitions for expansion into other regions in the future.

The technology behind this innovative platform is developed by Digital Platformer. Moreover, it is believed to be leveraging Hyperledger Iroha, a creation of Japan’s Soramitsu. While stablecoin initiatives have been undertaken by banks worldwide, Hokkoku’s focus on retail customers and the backing by actual bank deposits distinguishes it from others in the field.

Meanwhile, Japan’s crypto regulatory landscape has seen recent changes. It has passed new laws permitting three types of stablecoins, including those backed by banks. This regulatory support extends to trust-enabled stablecoins, exemplified by MUFG’s Progmat Coin platform, which facilitates the issuance of stablecoins backed by various trust banks. Another significant initiative in Japan is DCJPY, a deposit token project set to launch in the current quarter.

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