The Power of Tokenized Fiat
“Tokenized fiat” or “stablecoins” are getting more and more attention in the cryptocurrency world now. Stablecoins projects such as Circle’s USDC, Libra Association, and etc. are all on the rise. Ken Nakamura, our president and CEO at GMO-Z.com Trust Company, had a chance to discuss the power of tokenized fiat in Asia Blockchain Summit 2020 and shared his vision on tokenized fiat.
The market for tokenized fiat has recently grown so quickly. One possible viewpoint is the rising attention of CBDC (central bank digital currency) which is mainly driven by Facebook’s efforts on stablecoin. Another viewpoint is the uncertainties and fear against its sovereign currencies due to the Covid pandemic. For example, take the stimulus package in the U.S. Trillions of dollars have been issued to the market and the concerns about potential hyperinflation linger at the corner. Since JPY fiat is often seen as a safe-haven currency, we believe that JPY-backed stablecoin may provide a solution in such uncertain situations. At the same time, we believe that the uncertainty will accelerate as more and more central banks start issuing digital currencies. However, we do think this will be more of a mid- to long-term outcome and we foresee governments and private sectors collaborating in the effort of achieving mass adoption.
To drive the tokenized fiat market, we see the importance of credibility, transparency, security, and accessibility. Also, being regulated by the leading digital assets authority represents a significant and differentiating factor for these innovative offerings. The industry as a whole needs to make sure customer assets are protected and we believe that can be bettered through regulation and oversight. We are subject to the New York Department of Financial Services’ ongoing oversight and examination of our policies, procedures, and operations. Additionally, we are required to keep customer assets segregated, which means that all stablecoin assets in custody are always protected and bankruptcy remote.
From our perspective, we view the use cases for tokenized fiat in a phased approach. Phase One is the settlement function in digital asset trading, which we already see in the digital asset space. Phases Two and Three will be more of actual use cases in global remittance, payments, payroll, and trade finance. GMO Internet Group maintains a prominent presence in these businesses and our intention is to seamlessly integrate our stablecoins into the existing business model. We are a technology company at heart and it is extremely important that we take an open-source approach so that anyone can utilize the asset however they want. Users should be able to pick and choose what products they like and how they want to use them, just like with other technology services. We aim to bridge the gap between traditional finance and digital assets. The next journey for the crypto industry is to accelerate actual use cases outside of just trading, and we believe in our ability to bring additional value to the digital fiat.
Learn more about GMO-Z.com Trust Company and GYEN at stablecoin.z.com
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