Deploying the digital yen will take some time due to Japan’s late start. The decision represents a cardinal change for the country, whose central bank representatives saw “no demand” for a central bank digital currency (CBDC) as late as December 2019.
Ruling party lawmakers in Japan are reportedly working on a proposal to issue a national digital currency, Reuters reports on Jan. 24. This appears to be a response to fears of a Chinese digital yuan.
The planned digital yen would be jointly developed by the government and private companies, and would follow many similar initiatives around the globe.
The proposal is worked on by a parliamentary group comprised of 70 Liberal Democratic Party lawmakers. The group plans to submit the proposal to the government some time in February.
Libra and yuan fears fuel the decision
The announcement of Facebook’s Libra and China’s digital yuan pushed central banks around the world to look into issuing their own CBDCs. This was a major discussion point at a World Economic Forum panel on Jan. 23.
However, each initiative works to solve different problems. Libra is primarily offered as a global and frictionless payment network, while the digital yuan’s purpose is to enhance China’s financial clout, according to former Bank of Japan board member Takahide Kiuchi.
Japan’s Finance Minister Taro Aso expressed fears of the yuan becoming a widespread settlement currency, which may have partially motivated the creation of a Japanese CBDC. However, Kiuchi believes that the primary motivation for a Japanese CBDC is to replace cash. As a country that already introduced negative interest rates, the circulation of cash prevents further expansion of that policy.
Japanese Messenger Line, Nomura Holdings Form Blockchain Alliance
Japanese messaging app Line has entered into a final agreement with financial giant Nomura Holdings to form a blockchain alliance.
Focus on blockchain technology
On Oct. 4, Line, together with Line Group company LVC Corporation and Nomura Holdings, announced that the three companies have signed the final capital alliance agreement, which is based on the collective intent to explore business opportunities in the blockchain industry.
Cointelegraph previously reported that the three partners had signed a memorandum of understanding at the end of January 2019, with the intention to sign a formal contract by the end of March.
According to the press release, Nomura Holdings completed its investment into LVC, which will further establish a financial alliance with a focus on blockchain technology.
This is not the first time that Line and Nomura have entered into a partnership. Earlier in 2018, they set up a firm to provide securities brokerage services and investment advice, where Nomura would own 49 percent and Line would control the remaining 51 percent.
Line currently has 81 million monthly active users in Japan.
Nomura Holdings invests in Coinbase-backed token
Cointelegraph reported on Sept. 24 that Nomura Holdings, together with two other major commercial banks, Santander’s VC arm Santander InnoVentures, and MUFG Innovation Partners, invested $14 million in Securitize, a Coinbase-backed token issuance protocol.
Japanese Financial Giant SBI and SMFG to Partner for Digital Banking
The second largest bank in Japan will sign a deal with SBI Holdings to offer digital banking services available on smartphones.
According to an April 27 article in the Nikkei newspaper, the Sumitomo Mitsui Financial Group (SMFG) and SBI have launched the first steps towards a multimillion dollar agreement expected to conclude later this week, before Japan enters its Golden Week banking holidays.
In June, SMFG will acquire a 20% stake in SBI subsidiary NeoMobile Securities, holdings worth several billion yen. By the end of this year, SBI will accept an investment from SMFG to create a new $1 billion fund to invest in companies involved in digital technology. The new fund will explore areas for investment like fintech, blockchain, and 5G.
Close ties to Ripple
SBI is a firm with a known affinity for the cryptocurrency XRP. Their chief executive officer (CEO) Yoshitaka Kitao is a member of Ripple’s board of directors – in addition to his known friendship with Satoshi claimant Craig Wright – and the company has even considered paying shareholder dividends in XRP tokens.
SBI Mining Chip, another subsidiary of the Japanese financial giant, started manufacturing crypto mining equipment in 2019.
New regulations for digital assets in Japan
Though the partnership between SMFG and SBI shows a heightened interest in digital currencies from both firms, crypto exchanges and digital assets in Japan will soon face new regulatory challenges.
Laws passed by Japan’s House of Representatives last year regarding the Payment Services Act and Financial Instruments and Exchange Act will come into effect on Friday, May 1. The two pieces of legislation are modifications to existing laws for regulating cryptocurrencies in Japan.