Mitsubishi UFJ Financial Group Inc, the largest bank in Japan, is currently in talks with issuers of global stablecoins to issue its tokens through its own blockchain platform.
Starting this month from June 1, Japan’s stablecoin law came into effect allowing the nation’s licensed banks, trust companies, and registered money transfer agents to issue these cryptocurrencies. As said, MUFG is talking to multiple parties for using its blockchain platform Progmat, in order to mint stablecoins linked to foreign currencies, such as the US Dollar.
In an interview with Bloomberg, MUFG’s Vice President of Product Tatsuya Saito said: “Issuers and users can feel safe using stablecoins” now the legislation is in effect.
Stablecoins play a crucial role in the cryptocurrency industry, providing investors with a reliable asset to hold funds during trades involving more volatile tokens. Designed to maintain a stable value, usually pegged to $1, stablecoins are often backed by reserves such as cash and bonds. Currently, approximately $130 billion worth of stablecoins are in circulation.
As a response to their increasing popularity, regulators have heightened their scrutiny of stablecoins. In Japan, legislation has been introduced to promote the use of stablecoins fully backed by fiat cash in a corresponding currency, ensuring greater stability and transparency.
MUFG – Using Progmat to Issue Security Tokens
Saito said that Japanese banking giant MUFG is thinking of a use case for its Progmat in order to issue security tokens for third parties. Also, it has no plans currently to float its own stablecoin.
Currently, MUFG is discussing stablecoins with Japanese financial institutions, entertainment firms, as well as other non-financial businesses. Saito added that there are already inquiries coming from overseas financial groups. Thus, Japan could establish itself as the hub for issuing stablecoins.
Tether, the leading stablecoin, holds over 60% of the market value in the stablecoin sector. The second-ranked stablecoin is USD Coin by Circle Internet Financial Ltd. Token issuers must follow Japan’s legislation to create their tokens in the country.
According to Saito, the fact that stablecoins can be based on various currencies, including the dollar, and operate within regulations opens up possibilities for issuing tokens for international use. Saito believes this presents a significant opportunity for Japan.
While Japan has taken steps to relax certain cryptocurrency regulations, such as token listing and taxation, it is generally seen as having strict regulations in the industry. Japan is also trying to lose up the margin trading rules for crypto.
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