Japanese blockchain financial services company Crypto Garage has announced in a press release yesterday (Jan 21) that it has received official permission to test the issuance of Japanese Yen tokens, and the payment settlement service between such tokens and crypto assets.

Called Settlenet, the system uses Blockstream’s Liquid in a manner that allows exchanges to issue yen-pegged stablecoins, as well as trade against Liquid Bitcoin (L-BTC) pegged to Bitcoin on a Bitcoin sidechain launched by Blockstream.

The platform also has the ability to make cross-blockchain transactions without manually converting assets.

“This will enable rapid, secure and confidential transfer of the crypto assets while eradicating counterparty risk. In addition, SettleNet will provide the regulatory authorities with the functionality to monitor any unlawful trade, including money laundering,” the press release explained.

Crypto Garage will conduct a one-year pilot with a group of participating cryptocurrency exchanges. The firm, however, has confined the project only to exchanges holding a Japanese Virtual Currency Exchange License, and has put a limit on the transaction volume.

The Digital Garage subsidiary claims Settlenet to be the first such blockchain finance project to get the go-ahead under Japan’s Regulatory Sandbox scheme managed by the country’s Cabinet Secretariat.

Recent developments in Japan’s blockchain sector hint that the country could be trying to boost the industry again following a string of hacks last year, including the one on Coincheck which lost more than half a billion dollars.

Coincheck has obtained a full regulatory license from Japan’s Financial Services Agency (FSA). FSA has also apparently received licensing applications from more than 190 crypto exchanges as of last month.