Mitsubishi UFJ Financial Group (MUFG), the largest financial institution in Japan, is reportedly considering issuing global stablecoins via its blockchain platform, Progmat. MUFG has already shown interest in introducing such tokens tied to the value of the Japanese yen. However, the company is now in talks with industry leaders and other companies on minting stablecoins pegged to foreign currencies like the US dollar.
Partnerships and Potential
To issue stablecoins pegged to foreign currencies, MUFG intends to use its blockchain platform Progmat. The company has also announced that potential partners in this move are local financial institutions, entertainment firms, and other non-financial businesses. Inquiries have also come from foreign organizations, meaning that Japan could become a global hub for stablecoins. Tatsuya Saito, Vice President of Product at MUFG, believes that stablecoins will bring additional consumer protection, with issuers and users feeling safe using them.
Regulatory Landscape
In Japan, stablecoins have been the subject of enhanced scrutiny, especially after the collapse of the algorithmic stablecoin UST last year, which led to multi-billion investor losses. The Japanese authorities have recognized stablecoins as digital money but said they could only be issued by licensed banks, money transfer agents, or trust companies. MUFG’s move to issue stablecoins through its blockchain platform aligns with the recently-enforced legislation, which aims to bring additional consumer protection for stablecoin issuers and users.
Advances in Japan’s Crypto Industry
Under the lead of Prime Minister Fumio Kishida, Japan’s government has allowed the local crypto industry to thrive by introducing favorable rules. It approved a policy last summer that aims to advance the Web3 sector in the country. Leading lobbying groups have also raised their voices on crypto taxation, insisting that the ruling body reduces the rates. If approved, domestic companies will be excluded from paying taxes on paper gains on cryptocurrency holdings if they own them for purposes other than short-term trades.
MUFG’s plan to issue stablecoins through its blockchain platform Progmat is a significant move, especially since Japan’s regulatory authorities have only allowed licensed banks, money transfer agents, or trust companies to issue stablecoins. The move could potentially make Japan a global hub for stablecoins, with several local financial institutions, entertainment firms, and other non-financial businesses being potential partners. Additionally, the move aligns with Japan’s recent advances in its crypto industry, introducing favorable rules and policies to promote growth and innovation in the sector.