One of Japan’s most prominent banks, Mitsubishi UFJ Financial Group (MUFG), has announced its intention to issue global stablecoins linked to various foreign currencies, notably the United States dollar. To accomplish this, the financial powerhouse will utilize its Progmat platform for minting these coins.
Since the beginning of June, Japan has implemented a new law, allowing licensed banks, trust companies, and registered money transfer agents in the country to legally issue these cryptocurrencies. By establishing itself as a global hub for stablecoin issuance, Japan has positioned itself to support the expansion of decentralized internet and web3 companies.
This strategic move is expected to open up lucrative opportunities within the digital realm, allowing the nation to explore and benefit from the potential growth in this space.
MUFG To Develop Security Token Offering Platform For External Parties
According to Tatsuya Saito, the Vice President of Products at MUFG, overseas financial groups have been expressing interest in stablecoin projects, indicating that Japan has the potential to emerge as a global hub for stablecoin issuance.
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This growing interest from international entities further highlights the promising prospects and opportunities that lie ahead for stablecoins in Japan’s financial landscape. The timing of this move aligns with Prime Minister Fumio Kishida’s agenda to revitalize Japan’s economy, which includes a focus on supporting the growth of Web3 firms.
Web3 refers to a concept of a decentralized internet that is built on blockchain technology, the underlying technology of cryptocurrencies.
Japan Introduces Legislation To Foster Stablecoin Adoption
Stablecoins are essential within the cryptocurrency markets as they offer investors the ability to hold funds while engaging with highly volatile digital assets. Supported by reserves like cash and bonds, these particular types of cryptocurrencies are typically designed to maintain a fixed value, often pegged to the US dollar.
The circulating supply of stablecoins currently stands at approximately $130 billion. Due to their growing popularity, regulators have increased their scrutiny of stablecoins. In Japan, specific legislation has been introduced to encourage the use of stablecoins that are fully backed by fiat cash in a corresponding currency.
This approach aims to enhance stability and transparency within the ecosystem. Given this, MUFG is exploring potential use cases for its Progmat platform, considering the issuance of security tokens for third parties.
However, the bank does not have any immediate plans to launch its own stablecoin. At present, MUFG is engaged in discussions regarding stablecoins with various Japanese financial institutions, entertainment companies, and non-financial businesses.
Saito highlights that the flexibility of stablecoins being based on different currencies, including the US dollar, and their compliance with regulations, creates opportunities for issuing tokens that can be utilized internationally.
Although Japan has made efforts to ease certain cryptocurrency regulations, such as those related to token listing and taxation, the country is generally perceived as having stringent regulations within the industry. To create tokens in Japan, token issuers are required to adhere to the country’s legislation.
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