The move could help restore confidence in stablecoins and cryptocurrencies, as regulatory issues have been covered and the law allows only trusted companies to issue tokens.
Mitsubishi UFJ Financial Group (MUFG) is interested in using its Progmat blockchain platform to create a stable coin and is meeting with domestic and international companies for possible collaborations.
The move is in response to Japan’s new stablecoin law, making the country the first among major economies to issue an explicit stablecoin law. The law assumes that the stablecoin must be pegged to the yen or another currency that serves as a reserve asset. It allows the issuance of tokens only to licensed banks and registered money transfer agents in the country.
Stable coins are expected to have a stable value in relation to the asset or currency they are tied to. They are designed to hedge against crypto volatility. However, their essence has been compromised many times in the past. A popular example of this is the recent TeraUSD (UST) The crash, where many investors went bankrupt, resulted in a total loss of over $40 billion.
MUFG minting stablecoins could boost user confidence and help Japan’s economy
It is believed that the credibility of stablecoins can be traced back to the company or organization that issued them. If the company’s reserves are not large enough to support the value of the token, it may lose its value. Security breaches are also an issue with stable coins. Regulatory issues related to stablecoins can also affect these coins. Japanese law allows accredited and registered entities to issue and mint coins, one could argue that this gives stablecoin users a sense of security.
The move could help restore confidence in stablecoins and cryptocurrencies, as regulatory issues have been covered and the law allows only trusted companies to issue tokens. They can be used as digital currencies as their status is similar to fiat currency like USD and JPY.
Although the law allows a company like MUFG to create and issue a stablecoin, it currently has no plans to create any native tokens of its own, but is in discussions with various parties and stablecoin companies to see whether global How to use your blockchain platform, Progmat, to create stablecoins at scale.
Tatsuya Saito, vice president of product at MUFG, emphasized in an interview that the move will give stablecoin issuers and their users confidence in using digital assets. Although he did not specify the companies the bank is in touch with, he said talks are underway with some financial institutions, non-financial businesses and entertainment companies in Japan.
Saito also said that there have been inquiries from international institutions, which puts Japan in a position where it can become a center for stable coin issuance. in his Word,
“This is a huge opportunity for Japan.”
Although Japan still has what can be called strict crypto regulation, its Prime Minister Fumio Kishida has revealed his plans to support the Web3 initiative. The move could help blockchain projects and companies to flourish better in the country.
Temytop is a writer with over four years of experience writing in various fields. He has a special interest in the Fintech and Blockchain sectors and enjoys writing articles in those fields. He holds bachelor’s and master’s degrees in linguistics. When he is not writing, he trades forex and plays video games.
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