Settlenet System Gains Commercial Service from Crypto Garage

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Crypto Garage, the Japan-based blockchain development company, has recently announced that it will launch a commercial service within the Settlenet platform, aiming at its OTC crypto market.

Launching New Settlement System

As the update posted on the 8th of June on Digital Garage’s website explained it, the Crypto Garage venture is set to launch a new commercial service. This service will be built for the settlement system built within the Liquid Sidechain of Blockstream: Settlenet.

Settlenet specializes in Over-The-Counter (OTC) transactions of digital assets, doing so for cryptocurrency exchanges, trading companies, brokers and asset managers. The Settlenet network has been in development since before January of 2019, which was when Crypto Garage managed to obtain the relevant regulatory approval from the Financial Services Agency (FSA) of Japan. This approval was first only for a demo version, however.

A New Solution For Innovative Network

In the recent announcement, digital Garage explained that this demo solution allowed them to go beyond the stage of proof of concept, leveraging the testing environment. The company stated that the result was a solution to the issue revolving around the simultaneous settlement of Japanese Yen funding and real digital assets being done via a side chain. Digital Garage had already filed a report with Japanese regulators. This report was in regard to the one-year pilot program that it operated, and was reported in January of 2020

Blockstream had launched Liquid back in October of 2018, standing as the first production-ready, public Bitcoin (BTC) sidechain at the time. The goal was to allow for quick, secure transfers of digital assets between companies. The Liquid Network itself currently holds 45 members, consisting of market makers, crypto exchanges, financial operators, brokers, and more.

Simultaneous Settlements Now Possible

Settlenet leverages Liquid as part of an arrangement to allow exchanges to issue out stablecoins pegged by the Japanese Yen, then trade it against Liquid Bitcoin (L-BTC). The system itself leverages an asset exchange protocol by the name of “atomic swap” within the Liquid Network itself. This, according to the announcement, is in order to allow for the simultaneous exchange of assets between the trading parties without the need to hand over control of the assets to a third party within the blockchain. Furthermore, Digital Garage is reporting average transaction times of just two minutes.

Settlenet’s launch comes just as the crypto industry within Japan is being reshaped, with new regulatory laws being enforced. On the 1st of May, the country’s Payment Services Act (PSA), as well as its Financial Instruments and Exchange Act (FIEA), had several changes be put in effect.

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A journalist, with experience in web journalism and marketing. Ali holds a master's degree in finance and enjoys writing about cryptocurrencies and fintech. Ali’s work has been published on a number of cryptocurrency publications.