Challenges
Lack of in-house capability to mint and burn stablecoins
GMO Trust wanted to offer fiat-based stablecoins tied to JPY and USD as a way for trading companies, international businesses, and exchanges to send money efficiently for cheaper cost or hedge against volatility while trading seamlessly between fiat and digital assets.
At first, Ken Nakamura, CEO of GMO Trust, considered developing the stablecoin minting and burning process in house but ultimately decided it was too cumbersome with its custody, private key, and other workflow requirements.
Choosing to mint and burn stablecoins in house would also restrict trading hours. Digital asset markets trade 24/7 and bringing the process in house would limit token issuing and adjustments to typical business hours—which would negatively impact revenue.
At the same time, Ken knew they would face strict regulatory requirements. Tokenization of any kind is subject to rigid, detailed operational procedures and risk mitigation plans which would need the approval of regulators.
So Ken and his team started looking for a third-party stablecoin tokenization provider that could manage the process and meet regulatory requirements. But in spite of an exhaustive search, they
couldn’t find anyone with the capability to automate and support the entire stablecoin tokenization process end to end.
However, unlike the other vendors on Ken’s shortlist, Fireblocks was willing to put its expertise to work and develop a process that met Ken’s requirements.
If we were to mint and burn stablecoins in house, we’d need to manage at least seven private keys in a distributed manner with a minimum of two signers for each private key. The list of requirements would be long and the process cumbersome.
Solution
Fireblocks’ tokenization engine for stablecoins
Not only did Fireblocks build the ideal end-to-end tokenization solution for stablecoins, it did it in just 30 days.
Fireblocks was able to meet this short timeline partly because regulators were already familiar with its MPC technology and didn’t need months to assess it.
With Fireblocks, GMO Trust now has:
- Full minting and burning capabilities for stablecoins.
- Multi-layer security applied to all three tokenization phases through a MPC-CMP wallet infrastructure.
- A powerful and easy-to-use operations dashboard to manage daily operations across GMO-Z.com Trust Company’s entire token ecosystem.
- Flexible policy engine to ensure regulatory compliance.
- Simplified private key management for a more simple, seamless process.
- Faster, more secure transaction signing and settlement.
- The ability to mint and tie stablecoins to any official national currency.
Fireblocks’ tokenization process with MPC technology allowed us to remove all the private key management on our end. Having zero point of failure with that technology has been crucial.
Results
3X profitability vs. in-house tokenization
With Fireblocks’ end-to-end tokenization engine in place, Ken estimates that GMO Trust is generating three times more profitability versus an in-house, manual process.
Increased profitability is largely thanks to the ability to mint and burn stablecoins 24/7 as opposed to only during business hours.
GMO Trust is also benefiting from not incurring the operational costs of managing a complex stablecoin workflow in house.
Having fiat-based stablecoins is also bringing in new customers and deepening existing customer relationships.
In fact, GMO Trust is the first in the world to issue GYEN stablecoin (a regulated Japanese YEN-pegged stablecoin), and it has also started issuing USD-pegged stablecoin, ZUSD. And both achievements are made possible only by GMO Trust’s close partnership with Fireblocks.
We couldn’t enable 24/7 minting if we were doing this manually, which is tripling our profitability. It makes Fireblocks a no-brainer.