Japanese trading giant Mitsui & Co. is planning to launch a digital currency dubbed ZipangCoin (ZPG) as soon as this month. The currency will be pegged to gold prices and traded on cryptocurrency exchanges to individual investors.
People will be able to purchase things from associated businesses using a smartphone app, similar to how other digital payment systems are growing more popular in the country.
First Gold-Backed Crypto in Japan
This appears to be Japan’s first gold-backed cryptocurrency. The new cryptocurrency’s value will be less volatile than Bitcoin and other cryptocurrencies that are not backed by tangible things. Mitsui has established a cryptocurrency exchange with Seven Bank and others and has registered it with the Kanto Local Finance Bureau, with a license from the Financial Services Agency of the Japanese government (FSA), according to Nikkei Asia.
Mitsui will purchase gold from the London Metal Exchange at yen-denominated pricing, which will be tied to ZPG. Sumitomo Mitsui Banking will guarantee the value of one ZPG, which will be equal to one gram of gold.
Gold is utilized as a real asset to reduce risk and protect against inflation. Although the metal can be placed in exchange-traded funds, some argue that connecting it to a cryptocurrency will encourage young people to manage their money better.
Mitsui intends to accept ZPG as a form of payment. For example, users will download a wallet software to their smartphones in order to make purchases at convenience stores and supermarkets.
The new currency will first be sold on Mitsui’s exchange before being made available on other platforms. Users’ identities will have to be verified by those registered exchangers. To limit the number of users, safeguard privacy, and prevent money laundering.
Japan is only now warming to the notion of creating its own digital currency. A partnership of 74 firms and organizations, including the country’s three megabanks and NTT Group, said in November last year that they will test DCJPY, a bank deposit-backed digital currency. In the second half of the year, digital currency is expected to be available for inter-company payments.
Cryptocurrency regulations are being tightened in many nations around the world, including Japan. The Financial Services Authority has limited the creation of cryptocurrencies backed by legal currencies to banks and money-transfer companies. The Finance Ministry has indicated that cryptocurrencies will be subject to capital transaction laws under the foreign exchange law.
However, Japan’s recent efforts toward cryptocurrency are encouraging. Japan may need to revisit its money laundering laws and other financial rules in order to make cryptocurrencies widely available.