In a significant development for the blockchain industry, MUFG, Japan’s largest bank, has revealed its plans to issue native bank-backed stablecoins on various public blockchains.
The announcement on June 2nd emphasizes MUFG’s adoption of its Progmat Coin solution. This solution enables the bank to issue stablecoins on various platforms, including Ethereum, Avalanche, Cosmos, and Polygon.
While the project is still in its early stages, MUFG’s decision to explore stablecoin issuance on multiple blockchains showcases the bank’s commitment to leveraging blockchain technology.
However, the bank has refrained from providing a confirmed timeline for the launch of this initiative. The Progmat Coin solution is not exclusively limited to MUFG; it is also designed to support stablecoin issuance from other trust banks.
This development comes shortly after recent legislation that now allows Japanese trust banks to issue stablecoins. This regulatory change sets the stage for greater adoption of digital assets within Japan.
MUFG’s collaboration with DataChain, a blockchain interoperability startup, has been previously reported. The bank is also working closely with TOKI, a cross-chain bridge solution based on DataChain’s technology.
This partnership aims to facilitate cross-chain swaps, cross-chain payments, and cross-chain lending for public blockchains. For instance, a Progmat Coin on one blockchain could potentially settle the purchase of a non-fungible token (NFT) on a different blockchain.
TOKI, founded earlier this year in Dubai by a DataChain executive, plans to launch its bridge later in 2023 and introduce its own cryptocurrency token. It intends to accomplish this by establishing liquidity pools with Progmat Coins on various blockchains.
It is worth noting that this initiative primarily focuses on the Japanese market. However, further details regarding user compliance and the process of holding the stablecoin have yet to be clarified.
In addition to stablecoins, the Progmat platform also supports security and utility tokens, some of which may involve cross-bridge functionalities. This platform has already issued several security tokens.
Initially established by MUFG, Progmat has transformed into a joint venture. It has received support from JPX, the country’s primary stock exchange operator, and Mizuho, SMBC, SBI, and other prominent entities.
MUFG’s Progmat platform operates on R3’s Corda enterprise blockchain, while DataChain’s technology is based on Cosmos’ Inter-Blockchain Communication (IBC) protocol. The core technology of the collaboration has been open-sourced as the Hyperledger YUI Lab.
Additionally, MUFG has forged a partnership with JCB, which is Japan’s equivalent of Visa. This strategic alliance further solidifies MUFG’s position in the blockchain and digital payment arena.
This news comes following Societe Generale’s groundbreaking move in April. It made history as the first systemic bank to issue a stablecoin on a public blockchain with its EUR CoinVertible.
However, there have been no reported transactions since the initial issuance of EUR 10 million. Similarly, Brazilian investment bank BTG Pactual introduced a US Dollar stablecoin earlier that same month.
As the blockchain industry continues to evolve, MUFG’s proactive stance in adopting blockchain technology for stablecoin issuance demonstrates the growing recognition of digital assets within traditional banking institutions.
The successful implementation of bank-backed stablecoins on multiple public blockchains has the potential to revolutionize the financial landscape, enabling faster and more efficient transactions while ensuring stability and trust in the digital economy.