Circle CEO Jeremy Allaire considers issuing stablecoin in Japan, expects to expand cross-application payment scenarios

Japan's "Stablecoin Law" came into effect in June. Jeremy Allaire, CEO of the stablecoin issuer Circle, visited Japan in June and stated in an interview with CoinDesk Japan that if stablecoins could be more widely used in cross-border trade, foreign exchange, and global commerce, Japan would become an extremely large market.

In fact, there are still many obstacles for stablecoins under current regulation in Japan: podcast interview with lawyer Huang Yashen who is currently in Japan.

Circle: Differences Between Stablecoins and Deposit Tokens

JPMorgan Chase released a report this year on Deposit Tokens, and CoinDesk Japan asked Jeremy Allaire about the differences between Deposit Tokens and Stablecoins.

Jeremy Allaire stated that "tokenized bank deposits" are intended for specific banks and their clients and are not open to the entire network. This may be convenient for some bank customers. However, it is not widely used on a global scale. Allaire believes that "stablecoins" based on public blockchains are more suitable.

Jeremy Allaire mentioned that Circle's focus is on using digital dollars applicable to various financial institutions and markets worldwide. They are building open protocols and standards to make it easier for developers to develop and use them. Circle also emphasizes the importance of a 100% reserve model, where the assets supporting the tokens cannot be lent out to establish a more secure foundation.

JPM Coin issued by JPMorgan is currently the most widely used Deposit Token. For more details, please see: JPM Coin, More Stable than Stablecoins, JPMorgan Ventures into Euro Market besides Dollar

Circle's View on the Application of Stablecoins in Japan: Payment Scenarios

Jeremy Allaire believes that Japan has excellent payment applications, and future payment applications will play a significant role. In most global markets, most payment applications should support stablecoins.

One of the current issues with payment applications is that they are closed systems, and you can only transact within the same application. For example, even if you have the U.S. payment app Venmo, you cannot transfer money to PayPay, Alipay, or Cash App.

However, stablecoins allow for more interoperability between wallets. In other words, digital wallets should be able to use stablecoins and exchange currencies with different digital wallets. It's like having an email address and being able to send emails to different email providers and services.

Stablecoins act as an open protocol for transferring value between any digital wallets, enabling many people to build applications on top of it and allowing different payment applications to work together.

Circle's View on the Asian and Japanese Markets

Financial centers like Hong Kong and Singapore are already stablecoin markets supported by the U.S. dollar, where Circle has customers. Circle has also recently obtained a major payment institution license in Singapore to expand its business in the region.

Japan has a long history in cross-border trade, forex trading, and global business. If stablecoins are more widely used here, Japan could become a very significant market.

The stablecoin regulations that came into effect in June in Japan are a crucial first step, providing an excellent framework for the government and stablecoin issuers. Circle hopes that Japanese companies, financial intermediaries, digital asset exchanges, and fintech companies will also use USDC. Circle is carefully considering the new regulations and the use of USDC in the Japanese market.

Jeremy Allaire believes that stablecoins pegged to fiat currencies are very useful. Circle hopes that the world's major currencies can all serve as stablecoins. Currently, Circle has issued stablecoins pegged to the U.S. dollar and the euro, and a stablecoin pegged to the Japanese yen would be a new opportunity, especially given the yen's potential attractiveness in trade and forex.

Regarding Japan's stablecoin regulations: Japan Passes Stablecoin Law! Must be Pegged to Legal Tender, Ensure Redemption, and Issued Only by Specific Financial Institutions

This podcast episode also invited lawyer Huang Yashen, who is based in Japan, to discuss the current situation in Japan's blockchain industry and the issuance and regulation of stablecoins in Japan.