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Japan Bank Launches Deposit-Backed Stablecoin 

Last Updated April 2, 2024 5:25 PM
Shraddha Sharma
Last Updated April 2, 2024 5:25 PM
By Shraddha Sharma
Verified by Peter Henn

Key Takeaways

  • Hokkoku Bank has reportedly become the first in Japan to launch a stablecoin.
  • Bank deposits back the Tochika stablecoin to peg its value.
  • The initiative aims to boost cashless transactions in a predominantly cash-centric Japanese society.

In a first, Japan-based Hokkoku Bank has unveiled its own stablecoin, Tochika. Japan seems to be moving towards a cashless society as the bank makes digital currency available in the banking app.

Notably, the stablecoin is backed by bank deposits.

Hokkoku Bank Launches Stablecoin

The stablecoin launch has bridged traditional banking with digital finance. It has also positioned  Hokkoku as the first Japanese bank to venture into cashless initiatives with the blockchain. The launch builds on the success of the Tochituka app that came out in 2023. As per reports, the app residents to earn and spend Tochipo points at local businesses. With stablecoin Tochika, users can reportedly use the digital currency for greater flexibility.

Users with an existing Hokkoku bank account can top up their Tochika balances through the Tochituka app and use this digital currency at participating local stores. The dual-functionality enhances user experience and increases cashless local commerce.

Stablecoin’s Cashless Transformation

Despite digital transformation in Asia, including Japan, the country has reportedly been reliant on cash transactions. Hokkoku Bank’s initiative can lower the digital apprehensions for retail businesses. By setting merchant rates at an appealingly low 0.5%, the bank aims to encourage more businesses to transition to digital transactions. Additionally, Hokkoku targets entities reliant on paper gift certificates to move digital.

Meanwhile, Hokkoku Bank has ambitious plans to extend the functionality of the Tochituka app to include person-to-person payments in 2024. The bank is also keen on expanding its network by inviting other banks to join this initiative, with sights set on reaching beyond regional boundaries in the future.

Several banks are venturing into stablecoins with Hokkoku’s Tochika standing out by being directly backed by bank deposits. It has diverged from the more common reserve-backed stablecoin approach.

The utility of stablecoins for trade settlements was recently highlighted  by a collaborative exploration involving Mitsubishi UFJ Trust and Banking Corporation. The joint venture reported that it will harness Japanese Stablecoin for international trade. The study addressed the limitations imposed by foreign exchange regulations and the benefits of blockchain for secure and efficient transactions.

TradFi Could Join in Stablecoin Exploration

Hokkoku Bank’s introduction of the Tochika stablecoin integrates digital currency with traditional banking services. Hokkoku is not only enhancing the payments for its customers but also setting a precedent for financial institutions and TradFi to expand their digital payment offerings.

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