Japan: MUFG stablecoin platform gets support from Mizuho bank

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Japanese banking giant Mizuho Financial Group (NASDAQ: MFG) is the latest to indicate support for Mitsubishi UFJ Financial Group’s (MUFG) (NASDAQ: MBFJF) stablecoin issuance platform as part of its bid to expand its frontiers.

Dubbed Progmat Coin, MUFG says its platform will serve as an alternative to traditional modes of settlements, allowing banks to make instantaneous settlements using stablecoins. With each transaction recorded via blockchain technology, experts say the platforms will offer the Japanese payment ecosystem the perks of lower costs, privacy, and security.

Although the stablecoin issuance platform is yet to go live, Mizuho’s support is expected to boost the platform’s development. Analysts expect several leading financial firms to pledge their support for the issuance platform ahead of a 2024 launch date.

However, the project faces an uphill climb with some Japanese financial institutions, including Shikoku Bank, Tokyo Kiraboshi, and Minna Bank, launching stablecoins without referencing MUFG’s offering.

Despite the initial setback, MUFG remains upbeat over the prospect of Progmat Coin, hinting at a partnership with NTT Data and the Japan Exchange Group. Leveraging on the onboarding of Mizuho Financial Group, MUFG hinted at inking new deals with banks and other financial institutions keen on launching their own stablecoin.

The firm is also exploring the creation of a bridge for cross-chain transactions for different blockchains via a collaboration with TOKI and Datachain. With a handful of deals and the functionality of interoperability under its belt, MUFG hopes to be the leading stablecoin issuance platform in the country.

The frantic race for new stablecoin solutions in Japan began in June after authorities lifted the lid on a ban on financial institutions launching stablecoin. An amendment to the Fund Settlement Act gave the green light. Still, interested entities are expected to adhere to several rules, including making regular disclosures to regulators.

“This does not mean that all foreign products of so-called ‘stablecoins’ will be allowed without any restriction,” said a Financial Services Agency (FSA) official at the time.

Improving custodial services

While the stablecoin issuance platform nears completion, MUFG has confirmed plans to launch a digital currency asset trust to improve custodial services in the local ecosystem. Customers of the trust will be allowed to invest in digital assets without owning the underlying asset.

MUFG’s proposed trust will see Web3 firm Ginco listed as a partner, aiming to lobby the implementation of a proper taxation system for digital assets in Japan.

Investors in Japan’s digital currency space have previously faced stiff taxation rules, including taxes on unrealized profits. Still, with several entities lending their voices, Japanese regulators may be forced to lessen the tax burden of industry participants.

Watch: Stablecoins with Daniel Lipshitz