Japan’s Largest Bank to Support Global Stablecoin Issuance

<p>Top Japanese banking group Mitsubishi UFJ (MUFG) is
reportedly holding discussions with stablecoin issuers to have them issue such
tokens on the group's blockchain platform. MUFG is also engaging entertainment
companies and non-financial businesses on <a href="https://www.financemagnates.com/terms/s/stablecoin/">stablecoin</a> projects.</p><p>The announcement is in
conjunction with the implementation of Japan's stablecoin law on June 1. The
law enabled the country's licensed financial institutions and registered money
transfer agencies to issue stablecoins. However, it only allowed for the
issuance and use of such tokens that are fully backed by fiat currencies. </p><p>Japan Eases Laws on Stablecoins</p><p>Speaking in an interview
with Bloomberg, MUFG's vice president
of product, Tatsuya Saito, said the group was engaging multiple parties to have
them mint stablecoins tied to foreign currencies, including the US dollar, on
their proprietary <a href="https://www.financemagnates.com/terms/b/blockchain/">blockchain</a>, Progmat. "Issuers and users can feel safe
using stablecoins now the legislation is in effect," he said.</p><p>Under the new
legislation, stablecoins can be denominated in dollars and
other currencies. This presents an important opportunity to issue tokens for
overseas use, Saito added. Such favorable policies come at a time Japan is
easing restrictions on cryptocurrencies.</p><p>MUFG has since opened the Prograt Coin platform for banks
in Japan, enabling lenders to launch stablecoins on public blockchains such
as Ethereum. The launch was in partnership with TOKI, a company developing a
cross-chain bridge, and Datachain.</p><p>This year, through its parliament, Japan introduced a
registration system for stablecoins and enabled overseas businesses to issue
such tokens in the country through custodians of digital assets. The changes
were made in accordance with a bill passed in 2022 that <a href="https://www.financemagnates.com/cryptocurrency/japan-to-adopt-strict-crypto-monitoring-rules-next-month/" target="_blank" rel="follow">regulates
cryptocurrencies</a> pegged
to the yen and any other currency.</p><p>Taming Financial System Risks </p><p>Japan has been keen on
controlling the financial system risks of stablecoins to protect investors,
especially amid the growing <a href="https://www.financemagnates.com/cryptocurrency/education-centre/the-rise-of-stablecoins-a-more-stable-alternative-to-traditional-crypto/" target="_blank" rel="follow">importance
of stablecoins</a> in the
digital asset sector. Stablecoins are backed by fiat currencies and bonds to
maintain a steady value, unlike the other volatile cryptocurrencies. However, at
times they lose their peg, and can lead to massive volatility. </p><p>Terraform Labs, TerraUSD, a stablecoin that used algorithm and incentive paid to traders to maintain its peg to the US dollar, collapsed in May. The implosion caused a massive market wipe-out of more than $40 billion. It also brought litigations against its Co-Founder, Do Kwon, who is <a href="https://www.financemagnates.com/cryptocurrency/news/terras-ambitious-luna-20-plunges-70-in-24-hours/" target="_blank" rel="follow">serving
a jail term</a> in Montenegro for forgery.</p>

This article was written by Jared Kirui at www.financemagnates.com.