In a groundbreaking collaboration, Japanese financial powerhouse Mitsubishi UFJ is teaming up with a leading cryptocurrency exchange to launch a new stablecoin, set to revolutionize the digital payments landscape.
The bank will collaborate with Bitbank, one of the largest and most established cryptocurrency trading platforms in Japan.
The companies and their partners hope to create a settlement platform for cryptocurrency companies that runs on stablecoins.
Since the government earlier this year passed legislation allowing banks and other regulated, traditional financial institutions to develop, handle, and operate stablecoins, the bank has been eager to offer stablecoin services.
A variety of domestic cryptocurrency and Web3 companies will collaborate on the initiative alongside Mitsubishi UFJ’s trust and banking division, according to an official statement and a Nikkei report.
The company stated that the end result will be the development of an “international payment system” driven by stablecoins.
The platform will launch in 2024 and feature the issuance of stablecoins linked to the US dollar and the Japanese yen.
MUFJ disclosed that it is collaborating on the platform’s development with Progmat, the bank’s own stablecoin subsidiary, and Web3 supplier Ginco.
The megabank started testing Progmat in March of this year in an effort to develop a system that will enable stablecoins running on different blockchain technologies to communicate with one another.
MUFJ also stated that it intended to invite “other domestic and international [crypto] exchanges” to take part in its initiative. Melcoin and Cumberland DRW, two cryptocurrency companies, have already joined.
When trading tokens with “overseas businesses,” customers will be able to “improve efficiency and reduce fees,” according to the bank.
Mitsubishi UFJ of Japan: Hedging a Lot on Stablecoins
MUFJ has worked with several smaller Japanese cryptocurrency players to build its Progmat affiliate program.
Since then, as the bank advances in the stablecoin market, it has split off the project into a separate business.
Numerous significant Japanese businesses, notably a subsidiary of Nippon Telegraph and Telephone (NTT), have backed Progmat. The largest telecom provider in Japan is NTT.
A division of SBI, a significant cryptocurrency and securities player with close ties to Ripple, has also invested in Progmat.
A dollar-pegged token called “XUSD” and a yen-pegged stablecoin called “XJPY” will serve as the foundation for MUFJ and its partners’ network.
The company and its partners are going to test a “cross-industry” stablecoin-powered infrastructure that will enable cryptocurrency exchanges to execute settlements more efficiently.
The firms said that rather than depending solely on traditional, fiat-powered bank transfers, exchanges will be able to employ stablecoins as a settlement method with liquidity providers thanks to the new platform.
They also mentioned how the hours of operation of banks hinder companies relating to bank transfers.
However, they stated that stablecoin-powered substitutes are accessible “24 hours a day, 265 days a year.”