The Japanese fintech startup Crypto Garage, Inc., a division of Digital Garage, reportedly got a green light for a launch of a financial blockchain project in the regulatory sandbox under the supervision of the Cabinet Secretariat. The startup will use the Liquid sidechain developed by Blockstream.
"We’re the first blockchain & finance project authorized for Japan’s Regulatory Sandbox. Utilizing SETTLENET, we will test the issuance of JPY Tokens and DVP settlement service between the token and crypto assets," reads the statement in the official company Twitter account.
According to the company press release, Crypto Garage will develop SETTLENET, which will allow participating exchanges to issue yen-pegged stablecoin on the Liquid Network basis, as well as trade the asset against L-BTC, which is tied to the bitcoin value.
Notably, SETTLENET will use atomic swaps to exchange L-BTC for the asset instantly.
The startup representatives believe that the underdeveloped infrastructure of exchanges and institutions is the cause of unstable liquidity and sharp price fluctuations. At the same time, they stress that there is no universal trading platform that, as a result, implies certain risks.
The project is at the initial stage so far. Nevertheless, its ultimate goal is to provide an OTC platform with transparent pricing. The initiative will be tested for exactly one year, and only licensed Japan exchanges will be allowed to participate in it.
For reference, Digital Garage initially announced about its collaboration with Blockstream in November 2017. They intended to promote the development of the blockchain in Japan, since, in their opinion, the Japanese market was ready to accept new business models backed up by the blockchain technology.