SBI VC Trade Becomes First Japanese Firm to Get a License to Handle Offshore Stablecoins

Today SBI VC Trade, a cryptocurrency exchange subsidiary of Japan's SBI Holdings, said it has become the first Japanese firm to be licensed as an “Electronic Payment

Today SBI VC Trade, a cryptocurrency exchange subsidiary of Japan’s SBI Holdings (6578) , said it has become the first Japanese firm to be licensed as an “Electronic Payment Instruments Exchange Service Provider”. The license is required to handle offshore stablecoins such as Circle’s USDC. SBI and Circle (NYSE:COIN) recently announced a collaboration to launch the latter’s USDC stablecoin in Japan.

SBI VC Trade is already licensed as a crypto exchange and for securities business. It plans to start a beta version of USDC services in ten days.

The move is notable for two reasons. Firstly, the USD – Yen exchange rate is an important one. To date stablecoins have mainly been used for crypto transactions and for emerging market residents to hold dollars. It has also been used for cross border payments, again mainly in emerging markets.

On the other hand, according to Swift, the Yen is the fifth most widely used currency for cross border payments, and ranks third (5.42%) if you exclude transactions between European firms.

Many are more skeptical about the utility of stablecoins for cross border payments between developed economies, particularly the US and Europe. It remains to be seen if the same applies to Japan.

Clearly stablecoins have potential in foreign exchange, especially at the retail level.

While SBI VC Trade is a crypto exchange, several organizations in the Japanese payments sector are also interested in stablecoins for cross border payments.

Japan’s largest bank, MUFG (8306) , is currently trialing stablecoins as an invisible backend alternative to Swift for cross border payments, alongside the other big three banks. In addition, MUFG co-founded Progmat Coin with SBI. Progmat is exploring stablecoins for various types of cross border payments, such as trade in emerging markets. Progmat also has a collaboration with Japanese stablecoin issuer JPYC, which applied for the same electronic payment instrument license.

Soramitsu is exploring cross border payments by integrating stablecoins with Cambodia’s Bakong digital payment system, which Soramitsu developed.

Ironically, the largest Yen stablecoin wasn't issued in Japan. It was launched by the New York registered trust GMO-Z which issues the GYen (Market cap: $10m) and ZUSD (market cap: $18m) stablecoins. GMO-Z is part of Japan’s GMO Internet (7680) Group.