Key Points
- MUFG is currently discussing with global stablecoin issuers to help them to create their stablecoins.
- This move comes after the new stablecoin legislation in Japan became effective on June 1, 2023,
- This rule permits licensed banks, trust companies, and registered money transfer agents to issue stablecoins.
The interest surrounding the world of finance has once again piqued with the recent news that Mitsubishi UFJ Financial Group Inc, the titan bank of Japan, is currently in discussions with global stablecoin issuers. The main topic on the table? The possibility of issuing their very own tokens through their very own blockchain platform. This move, if successful, could very well signal a new era for the bank and the financial industry as a whole.
Japan supports Stablecoins
As of June 1, Japan’s new stablecoin law went into effect, allowing licensed banks, trust companies, and registered money transfer agents to issue stablecoins. This move has opened doors for multiple parties to utilize MUFG’s blockchain platform, Progmat, to mint stablecoins linked to foreign currencies.
Specifically, the focus is on generating stablecoins tied to the US Dollar. Tatsuya Saito, Vice President of Product for MUFG, shared in an interview that “issuers and users can feel safe using stablecoins” with the new legislation in place. The significance of stablecoins in the cryptocurrency industry cannot be understated.
They offer investors a reliable asset to hold funds during trades that involve more volatile tokens. Stablecoins are designed to maintain a steady value, typically pegged to $1, and are frequently backed by reserves, such as cash and bonds. Currently, the total value of stable coins in circulation is around $130 billion.
The MUFG Initiative
As stablecoins continue to gain popularity, regulators are keeping a close eye on their operations. In Japan, legislators have even introduced measures to encourage the use of fully fiat-backed stablecoins in order to enhance transparency and stability. Sources indicate that MUFG, a leading Japanese bank, is exploring ways to issue security tokens for third parties using its Progmat.
Japan’s largest bank Megabank Mitsubishi UFJ Financial Group (MUFG) has announced its stablecoin issuance platform Progmat Coin that would be used to issue local bank-backed stablecoins on multiple public blockchains. pic.twitter.com/ZAcZoTGTFt
— HappyMiner (@happyminerUS) June 3, 2023
However, the bank has no current plans to launch its own stablecoin. Instead, MUFG is actively discussing the potential of stablecoins with financial institutions, entertainment companies, and other non-financial entities. Their efforts have even sparked interest from overseas financial groups, which could position Japan as a global leader in stablecoin issuance.
End Note
Despite recent efforts to relax certain cryptocurrency regulations, Japan still maintains a reputation for strict oversight in the industry. Nevertheless, the country is considering loosening margin trading rules for crypto, which could further boost its position in the global market.
