NYDFS approves yen stablecoin
Alt coins,  Regulation

In U.S. first, New York regulators approve yen-backed stablecoin

With the New York Department of Financial Services’ approval, Japanese IT giant GMO Internet Group will also issue a dollar-backed stablecoin

New York regulators have granted GMO-z.co Trust Company a charter to issue two stablecoins, including the first regulated Japanese yen-pegged  token, GYEN.

The company has been granted a New York State charter to operate as a limited liability trust company by the Department of Financial Services (NYDFS), according to a Dec. 29 statement by Linda Lacewell, the Superintendent of Financial Services.

Along with the yen-pegged stablecoin, the company has also been approved to issue a U.S. dollar-pegged stablecoin.

GMO-z is a division of Japanese IT giant GMO Internet Group, which has been working on the ZUSD and GYEN since 2018, according to its website. It described GYEN and ZUSD as being backed one-to-one by fiat reserves. It also said that the two stablecoins are built on the Ethereum blockchain.

“We’re breaking ground with our move to issue the first regulated JPY-pegged stablecoin, which many see as a safe haven asset,” said Ken Nakamura, President and CEO of GMO-Z.com Trust Company, in an NYDFS announcement.

He added that the company plans go beyond stablecoins to include “building new applications of blockchain technology that transform our relationship with traditional financial services.”

It is the 27th charter or license issued to virtual currency businesses by the NYDFS. The state updated its BitLicense program in October, issuing the first-ever “conditional” Bitlicense to PayPal.

Long considered the gold standard in U.S. regulation of cryptocurrency exchanges, the BitLicense comes with a great deal of prestige and respect from other regulators. But it has also been criticized as so tough to receive it drives companies off.

“New York continues to stay on the forefront of financial innovation as stablecoins take on growing significance and point to new directions in the future of money,” said Lacewell. “Approval of this charter is a testament to DFS’ commitment to encourage innovation, while providing rigorous regulatory oversight to uphold the integrity of the markets and to protect consumers.” 

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Leo Jakobson, Modern Consensus editor-in-chief, is a New York-based journalist who has traveled the world writing about incentive travel. He has also covered consumer and employee engagement, small business, the East Coast side of the Internet boom and bust, and New York City crime, nightlife, and politics. Disclosure: Jakobson has put some 401k money into Grayscale Bitcoin Trust.