Japan’s second-largest bank goes deeper into Web3

Despite the bear market prevailing in the crypto sector, Japan’s second largest bank (Sumiromo) wants to establish a stronger web3 foothold. The financial service provider therefore intends to issue its own “Soulbound Token” to verify identities in a new way.

Japan’s second-largest bank, Sumitomo Bank, has announced the use of soul-linked tokens for identity verification. Sumitomo Mitsui Financial Group (FG) is working with Hashport for this purpose, which is the result of a discussion that started in July 2022.

Identity verification using blockchain technology

The bank has a few intended use cases for the token, although it is initially only used for identity verification. Sumiromo plans to work with other companies to help them interact with their users through the token. As an example, the financial services provider cites how the Soulbound token can be used to verify a user when changing jobs. Additionally, the institute explains that the token can be used to check someone’s background when they change jobs.

The launch of the Soulbound token is the first phase of the collaboration between the two companies. The bank will issue the token on a trial basis. Hashport will support Sumitomo Mitsui until March 2023. The use of Soulbound tokens is an attempt by both parties to create a “safe and secure Web3 economic zone”. The Japanese government has already shown great interest in the Web3 industry and wants to take advantage of associated technologies.

Soulbound tokens are becoming increasingly popular

Soulbound tokens made headlines earlier this year when Vitalik Buterin and others published a research paper about it. In the paper, the authors talk about a soul-bound token that represents a person’s identity in the digital world. It would basically verify credentials to enable participation in various activities.

Soulbound tokens are an evolution of NFTs. They are unique but not transferable. As such, they have no real market value. However, they have several advantages, including potentially reducing the risk of fraud in the crypto space.

Japan Steps Up Web3 Efforts

SMCG’s decision to test Soulbound tokens is further proof that Japanese companies are eager to adopt Web3. The Japanese government has encouraged the development of this area in hopes of attracting businesses and reviving the economy.

The Japanese Ministry of Economy has even launched a Web3 office dedicated solely to crypto policy. Japan’s digital ministry will also set up a DAO to develop an understanding of how the technology works. Individual companies that are growing rapidly are NTT and Nomura. The first is Japan’s largest telecommunications company, the second is a major financial institution.

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