According to a recent article by Bloomberg, MUFG, the biggest bank in Japan, is seeking an opportunity to begin issuing stablecoins backed by various global fiat currencies (including USD) on its own blockchain platform called Progmat.
MUFG wants to issue popular stablecoins
Mitsubishi UFJ Financial Group Inc. has begun negotiations with firms that are minting popular stablecoins used around the world, regarding issuing these stablecoins in Japan as well, through Progmat.
On June 1, the local government passed a law that has made Japanese-licensed banks and licensed money transfer companies free to issue digital currencies. Overall, this law has basically allowed both issuers and users to use stablecoins and to "feel safe" while doing so, according to MUFG's top executive Tatsuya Saito. Still, he did not name any parties that the bank has been negotiating with about stablecoin emittance.
Japan’s Biggest Bank MUFG Is in Talks to Issue Global Stablecoins. The nation’s legislation on stablecoins took effect on June 1. MUFG has its Progmat blockchain platform for minting tokens. BBG https://t.co/Hu9RDHTA1G— Wu Blockchain (@WuBlockchain) June 23, 2023
Stablecoins play an important function in the cryptocurrency space and are used by traders and investors to park their money between more volatile cryptos, such as Bitcoin, Ethereum and many others. Stablecoins are most often backed by fiat cryptocurrencies, especially USD (the most popular ones are USDT and USDC), and they are sometimes issued on the basis of Bitcoin or other cryptos. There are also algorithmic stablecoins.
From time to time, there is a risk of stablecoins losing their peg; last year, the Terra network collapsed, taking down not only its LUNA token but also TerraUSD stablecoin. Earlier this year, USDC issued by Circle and Coinbase lost its USD peg for a very short time.
As for MUFG, it is offering emitters of stablecoins to act only as a third party and does not plan to create its own stablecoin, according to Saito.
Japanese traders attempt to raise crypto leverage limits
As reported by U.Today earlier this week, Japan Virtual & Crypto Assets Exchange Association intends to apply to the Financial Services Agency to seek permission to raise the leverage limit from 2x (used now) to 4x and up to 10x.
Traders believe that if this can be achieved, it would help Japan to turn into a global cryptocurrency hub welcoming major exchanges and other blockchain companies into the country.
However, FSA does not agree with them, stating that the Crypto Assets Exchange Association needs to provide "substantial grounds" for the change of leverage size.