MUFG To Issue Global Stablecoins Backed By Foreign Currencies Via Progmat Blockchain

Key Points:

• MUFG plans to issue stablecoins tied to foreign currencies for use globally.
• Japan’s stablecoin legislation promotes tokens that are fully backed by fiat cash in a matching currency.

Japan’s Biggest Bank, MUFG, is in talks to issue global stablecoins. The nation’s legislation on stablecoins took effect on June 1. MUFG has its Progmat blockchain platform for minting tokens.

Mitsubishi UFJ Financial Group (MUFG) is discussing with several companies, including issuers of popular global stablecoins, to mint such tokens via its blockchain platform, Progmat. According to Bloomberg, Japan’s stablecoin law became effective on June 1, and only licensed banks, registered money transfer agents, and trust companies can issue the tokens. MUFG plans to issue stablecoins tied to foreign currencies, including the US dollar, for use globally. The bank is also working on security tokens for third parties.

Tatsuya Saito, the Vice President of Product at MUFG, said that inquiries for stablecoin projects are coming in from overseas financial groups and that Japan could become a global hub for stablecoin issuance. This is a great opportunity for Japan, as Prime Minister Fumio Kishida’s agenda for reinvigorating Japan’s economy includes support for the growth of Web3 firms, which refer to a vision of a decentralized internet built around blockchains, crypto’s underlying technology.

Stablecoins are popular in the crypto sector, where investors often park funds in between trades involving more volatile tokens. They are meant to hold a steady value, usually $1, and are often backed by reserves like cash and bonds. However, stablecoins have periodically lost their pegs, causing instability in crypto markets. TerraUSD, a token that relied on algorithms and trader incentives, imploded in May 2022, causing losses of at least $40 billion. Regulators have since increased their scrutiny of stablecoins.

Japan’s legislation promotes tokens that are fully backed by fiat cash in a matching currency. This makes using stablecoins safer for issuers and users alike. The fact that stablecoins can be denominated in dollars and other currencies under the regulation paves the way to issue tokens for overseas use.

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