Crypto Garage, a subsidiary of Digital Garage and a fintech company in blockchain financial services sector, received an official green signal to conduct the first blockchain and finance project.
The regulatory sandbox is managed by the Secretariat of Japan and has given Crypto Garage the signal to participate with cryptocurrency exchanges. The official announcement by Crypto Garage stated:
“Under this project, Crypto Garage will provide the participating crypto-exchanges with “SETTLENET”, which allows the exchanges to issue a stablecoin pegged to Japanese Yen (JPY-Token) on the “Liquid Network”, and trade against Liquid Bitcoin (L-BTC) that are pegged to Bitcoin on a Bitcoin sidechain launched by Blockstream Corporation”
Settlenet is a suite of products to enhance application development on the Liquid Network. In addition, this project will make use of atomic swap technology that will allow L-BTC and JPY-tokens to be transferred simultaneously on the Liquid Network.
Atomic Swap technology enables peer-to-peer simultaneous exchange of crypto-assets from one part to another, without counter-party risks and going through a third party service without any counterparty risks or intermediaries
This is helpful especially for regulatory authorities as the Settlenet will allow the regulatory bodies to monitor any discrepancies or unlawful practices like money laundering.
This partnership plans to improve the overall growth of the cryptocurrency ecosystem and markets by providing enough liquidity and relatively stabilize price movements, minimize counterparty risk, increase the visibility of trading for the regulatory authorities. In addition, it aims to solve the security risks that the exchanges inherently possess.
The official announcement added:
“This initiative is a proof-of-concept project authorized by Regulatory Sandbox in Japan. The project will test and validate i) the secure transfer of crypto assets on a sidechain network and ii) the possibility of building a stable and healthy OTC market by improving transparency for the price-making process.”
Furthermore, the partnership for the project will have a term of one-year and the participating crypto-exchanges will be limited to those with a Japanese Virtual Currency Exchange License and the transaction amount will be limited. During this timeframe of one-year, Crypto Garage will provide Settlenet for free to all the participating exchanges.