Megabank Mitsubishi UFJ Financial Group (MUFG) recently announced that its stablecoin issuance platform “Progmat Coin” is gearing up to enable Japanese banks to launch Yen-pegged stablecoins on several public blockchains. With new regulations taking effect this month in Japan, many banks have begun outlining their intentions to either explore or launch stablecoins. In mid-2022, the Japanese government passed a bill prohibiting non-banking institutions from issuing stablecoins, which officially took effect on June 1, 2023.
MUFG’s Progmat Coin platform plans to facilitate the issuance of bank-backed stablecoins on Ethereum, Polygon, Avalanche, and Cosmos, with plans to add more networks in the future. The bank’s blockchain tech and security partners, TOKI and Datachain, are constructing a bridge to allow cross-chain transactions, lending, and swaps between the supported blockchains. The cross-chain infrastructure is expected to launch in the second quarter of 2022.
Originally announced in February 2022, Progmat Coin aims to provide a universal digital asset payment method for stablecoins, other crypto assets, and a potential Japan-based central digital bank currency (CBDC). While MUFG hasn’t disclosed the first financial institutions to utilize Progmat Coin, the bank has confirmed it’s working on launching its own Yen-pegged stablecoin.
On a separate note, Shikoku Bank, Tokyo Kiraboshi, and Minna Bank are planning to issue stablecoins but have opted not to use Progmat Coin. Instead, they will reportedly use a different stablecoin platform developed by Tokyo-based startup G.U. Technologies.
The wider adoption of stablecoin issuance platforms like Progmat Coin by major banks showcases the growing interest in exploring blockchain technology within the financial industry. This trend could potentially pave the way for rapid advancements in the space and contribute to the mainstream acceptance of crypto assets and supporting technology.
However, challenges remain for the stablecoin ecosystem. The increasing regulatory scrutiny and the new legislation in Japan can be seen as a double-edged sword, limiting the scope of stablecoin issuance while also providing a more structured framework for financial institutions to work within. As more banks explore stablecoin solutions, it remains to be seen how the landscape will shift under these constraints and what the impact on the broader crypto market will be.
Source: Cointelegraph
