The Japanese development company blockchain Crypto Garage announced that it was launching a commercial service on its Settlenet platform for the OTC market for cryptosystems.
According to a Digital Garage website update published on June 8, its company Crypto Garage is launching a commercial service for Settlenet, a settlement system using Blockstream’s Liquid Sidechain.
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Specializing in over-the-counter (OTC) transactions of digital assets for trading companies, cryptoexchanges, asset managers and brokers, Settlenet has been in development since before January 2019, when Crypto Garage obtained regulatory approval from the Financial Services Agency of Japan (FSA) for a demonstration version.
„In this demo, we went beyond proof of concept by using a test environment and were able to solve the problem of simultaneous liquidation of real digital assets and funds in Japanese yen in a side-stream,“ the Digital Garage announcement said. It submitted a report to Japan’s regulators on the one-year pilot program in January 2020.
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How the system works
Blockstream launched Liquid as the first public, production-ready Bitcoin (BTC) side channel in October 2018, enabling the rapid and secure transfer of digital assets between companies. The Liquid Network currently has 45 members, including cryptoexchanges, market makers, brokers, financial operators and others.
Settlenet uses Liquid as part of an agreement that allows exchanges to issue stablecoins with yen pegging and trade against Liquid Bitcoin (L-BTC). The system uses an asset exchange protocol called ‚atomic exchange‘ on the Liquid Network „to allow the simultaneous exchange of assets between the trading parties without handing over control of the blokchain’s assets to a third party“. Digital Garage reports an average transaction time of only two minutes.
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The new regulations in the Japanese exchanges
The launch of Settlenet comes at a time when new laws are being implemented to regulate cryptomonies in Japan. On May 1st, updates to the country’s Payment Services Act (PSA) and Financial and Exchange Instruments Act (FIEA) came into effect.