Megabank Mitsubishi UFJ Financial Group (MUFG) has unveiled its stablecoin issuance platform, Progmat Coin, which Japanese banks will utilize to launch Japanese yen-pegged stablecoins on various public blockchains. This announcement comes in response to new regulations that allow trust banks in Japan to issue stablecoins.
Enabling bank-backed stablecoins on multiple blockchains
MUFG’s Progmat Coin will facilitate the issuance of bank-backed stablecoins on Ethereum, Polygon, Avalanche, and Cosmos, with plans to expand to more networks in the future. The platform aims to provide an interoperable and universal digital asset payment method for stablecoins, other cryptocurrencies, and a potential Japanese central bank digital currency (CBDC).
The bank has partnered with blockchain technology and security firms Toki and Datachain to develop a cross-chain bridge, enabling cross-chain transactions, lending, and swaps among the supported blockchains. This cross-chain infrastructure is expected to be launched in the second quarter of 2022, further enhancing the accessibility and flexibility of stablecoin transactions.
Embracing the new regulatory landscape
The enactment of a law in mid-2022 prohibited non-banking institutions from issuing stablecoins in Japan. As of June 1, 2023, the legislation has come into full effect. In response, MUFG has positioned Progmat Coin as a solution to support stablecoin issuance by various trust banks, facilitating compliance with the new regulations.
While MUFG has not disclosed which banks will be the first to utilize Progmat Coin, it has confirmed its plans to launch a Japanese yen-pegged stablecoin. However, other banks, such as Shikoku Bank, Tokyo Kiraboshi, and Minna Bank, reportedly intend to issue stablecoins using a separate platform developed by Tokyo-based startup G.U. Technologies.
Advancing cross-chain banking and financial services
With the cross-chain bridge being developed by Toki and Datachain, MUFG aims to enhance the functionality of stablecoin transactions. The bridge will enable cross-chain swaps, payments, and lending, potentially allowing the settlement of transactions, including purchasing non-fungible tokens (NFTs), with Progmat Coin on different blockchains.
The collaboration with Toki and the plans for cross-chain banking indicate MUFG’s commitment to innovation and meeting the evolving needs of the digital asset ecosystem. Additionally, the backing of Progmat Coin by major stock exchange operators JPX, Mizuho, SMBC, SBI, and others signifies the growing interest and support for stablecoin initiatives in Japan.
Embracing a new era of trust and flexibility
As Japanese banks prepare to leverage MUFG’s Progmat Coin for the issuance of yen-pegged stablecoins, the financial landscape in Japan is transforming. Using public blockchains and developing cross-chain capabilities will enhance the trust, interoperability, and flexibility of stablecoin transactions.
While stablecoin regulations evolve globally, the proactive approach of MUFG and other banks in Japan demonstrates their commitment to embracing new technologies and driving innovation within the financial sector. As stablecoins continue to gain prominence, the industry looks forward to the benefits of secure, efficient, and compliant digital asset transactions facilitated by platforms like Progmat Coin.