Japan's largest bank, Mitsubishi UFJ Financial Group (MUFG), is set to revolutionise the stablecoin market by deploying stablecoins on top blockchains. Partnering with blockchain interoperability specialist Datachain and cross-chain bridge Toki, MUFG aims to establish seamless interoperability of authorised stablecoins across multiple blockchains using its Progmat Coin protocol. These stablecoins will be pegged to the Japanese yen at a 1:1 ratio, providing stability and familiarity for users within the Japanese market. Leveraging Toki's expertise in asset transfers across popular blockchains like Ethereum, Cosmos, Avalanche, and Polygon, MUFG aims to enhance the transactional capabilities of its stable assets.
This initiative marks the latest development in MUFG's blockchain journey, building upon the foundation laid by its ST Research Consortium, now rebranded as the Digital Asset Co-creation Consortium. Initially focused on security token standards, the consortium has expanded its scope to include stablecoins, non-fungible tokens (NFTs), crypto assets, and more. By leveraging the collective expertise of consortium members, MUFG aims to drive innovation across various sectors.
In a similar vein, three Japanese banks—Tokyo Kiraboshi Financial Group, The Shikoku Bank, and Minna no Bank—have recently unveiled plans to develop a payment system integrating their stablecoins on a public blockchain. Powered by Web3 infrastructure provider GU Technologies and dubbed 'Japan Open Chain,' the blockchain is fully compatible with Ethereum. The banks envision several use cases, including general consumer transactions and business-to-business remittances. To comply with Japan's new fund settlement laws, each bank aims to issue and remit its own stablecoin, which can be utilised in Ethereum wallets like MetaMask.
These developments come on the heels of Japan's legal revision, which introduced a registration system for stablecoin circulation and strengthened anti-money laundering measures. The regulatory change also enables overseas businesses to issue stablecoins in Japan through digital asset custodians. The overturned ban on fiat-pegged cryptocurrencies has paved the way for increased adoption and innovation in the stablecoin space within the country.
MUFG's foray into stablecoin deployment and the collaborative efforts of Japanese banks demonstrate a significant shift in the financial landscape, as institutions recognise the potential of blockchain technology to transform traditional payment systems. As stablecoins gain traction and comply with regulatory frameworks, they are poised to become a crucial element of the digital economy, fostering secure and efficient financial transactions on a global scale.
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