The New York State Treasury Department (DFS) has authorized GMO to develop and issue stable coins pegged to the US dollar and Japanese yen
DFS has granted GMO-Z.com Trust Company, a subsidiary of Japanese technology giant GMO Internet, a charter under the New York Banking Act. The charter enables the tech giant to act as a trust company with limited liability, according to the Bitlicense regulator.
In yesterday’s announcement, the regulator said GMOs in New York could issue, manage and redeem Japanese yen and US dollar-linked stable coins. DFS has so far approved 27 charters and licenses for companies providing cryptocurrency services to New York residents, including the GMO charter.
To obtain the charter, GMO had to meet stringent requirements for its cybersecurity programs and federal anti-money laundering and economic sanctions standards. The JPY-linked stablecoin (ticker: GYEN) and the USD-linked stablecoin (ticker: ZUSD) can be bought and redeemed directly from the company.
For its part, GMO has entered into a strategic partnership with global cryptocurrency exchanges to improve the accessibility and liquidity of stablecoins. While the dollar-pegged stablecoins are available in the market, GYEN will be the first publicly available stablecoin pegged to the Japanese yen. As such, GMO will be the first to pioneer a global and regulated version of the JPY-linked stablecoin.
The stablecoins will be available from January 2021 and institutional corporations and retail users will be able to use them for trading, institutional hedging, arbitrage, billing and payments.
GMO-Z Trust President Ken Nakamura is delighted with his company’s move to create the first regulated JPY-linked stablecoin, a currency that most people consider a safe haven. “But we are also pioneers and innovators in this area who want to develop new applications of blockchain technology that will transform our relationship with traditional financial services,” he added.
The USD stablecoins have become popular in the field of cryptocurrency. Tether is the world’s leading stablecoin issuer, and the USDT coin is currently the third most important cryptocurrency in terms of market capitalization. However, USDT is now facing competition from other stable coins such as USD Coin (USDC), Binance USD (BUSD), TrueUSD (TUSD), and Paxos Standard (PAX).
DFS has been issuing licenses to companies that deal with crypto activities since 2015. Over time, the agency revamped its approach to cryptocurrency regulation to simplify the process for companies to adopt new digital currencies through a self-certification framework.