As GMO prepares the launch of its stablecoin, there are already 57 others in existence today. However, the GMO Japanese Yen (GJY) will be purposely put into circulation to facilitate a digital payments service.
According to a press release, the price of the GJY will correspond to the value of the Japanese Yen. Particularly, the intention is to have a cryptocurrency whose price range is manageable. Normally, cryptocurrencies exhibit a very volatile nature in terms of price. The price fluctuates wildly and that is one of the reasons why many people still remain unsure of the market.
Stablecoins Offer Better Chances of Market Liquidity
On top of that, the other cryptocurrencies are prone to price manipulation by malicious agents in the cryptocurrency space. Therefore, firms go for stablecoins that ground their value in legal tender. First, stablecoins have enhanced security. Users don’t have to worry so much about what the price will be tomorrow. Secondly, stablecoins operate under an established legal framework since they have the backing of legal tender.
As per GMO Internet, the company behind GJY, the stablecoin will support “borderless cryptocurrency transactions.” Particularly, the company went for a stablecoin because price stability leads to market liquidity. A coin that looks to support a payments service must have enough liquidity for the service to operate optimally.
Stock Tumbles Even as GMO Prepares Launch of GJY
Finance Magnates reports that, if successful, the payments service will be the third sector GMO enters. Interestingly, the company already has interests in cryptocurrency mining and exchange services. Initially, GMO Internet made it clear that it would exploit all the available sectors in the cryptoverse.
The news outlet quotes a company statement,
“GMO Internet Group has already entered exchange and mining domains but was still conducting research in the payment domain to learn whether cryptocurrencies can be used as payment currencies in terms of their volatility.”
Although the GJY project looks quite similar to Tether (USDT), GJY enjoys more compliance with existing regulations. As per Finance Magnates, GMO Internet already has a banking license which implies GJY will be fully compliant. Also, the license implies that GJY is subject to a regulatory audit, unlike US-backed Tether which boasts of high-end privacy.
Interestingly, even as GMO prepares the launch of its stablecoin, Nomura downgraded its stock from buy to neutral. As per StreetInsider.com, the market seems to have not responded positively to the new stablecoin.
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