Trillion Dollar Bank MUFG to Issue Stablecoins

• Japan’s biggest bank announces its intention to issue fiat-backed stablecoin following recent crypto regulations by local authorities. 

• Japan is seeking to petition the local regulators to soften restrictions on marginal trading. 

The biggest bank in Japan, MUFG has reportedly commenced negotiations to issue its stablecoin backed by the US Dollar and other global fiat currencies. According to the report, the companies engaged by the banks are minting popular stablecoins around the world. However, the announcement remained silent on the said firms. This news was shared by Wu Blockchain on Twitter:

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.

The Japanese government has opened doors for licensed banks and licensed money transfer companies to issue digital currencies. MUFG’s top executive Tatsuya Saito in a comment explained that the law is meant to protect both the issuer and the user. 

Stablecoin is an integral part of the crypto ecosystem and is most often backed by fiat currencies, especially USD. Interestingly, there are algorithmic stablecoins too. Concerns surrounding the space rose when the Terra network including its TerraUSD collapsed, sending a majority of the crypto assets plummeting. Since then, most of the assets have been at least 75 percent down from their all-time highs. According to Saito, the bank has no intention to create stablecoin, but to offer emitters of stablecoins the opportunity to act only as third parties. 

Leverage Trading Regulation Petition Arises Following MUFG Decision

Recently, it was reported that crypto trading venues in Japan are preparing to submit a request to Financial Services Agency (FSA) to loosen restrictions on marginal and also raise leverage by up to 10x. Leverage trading within the region has a level of exposure of 2x at maximum according to the Japan Virtual & Crypto Assets Exchange Association.

With the recent decision by crypto-related firms to move out of the US due to regulatory uncertainty, it is believed that Japan could stand a chance of becoming a crypto hub when it changes the rule on leverage trading. This new proposal is expected to be submitted by next month. 

Following the banking crisis in the US that affected the likes of SVB, USDC depegged temporarily. However, the price volatility of US-based stablecoins is said to remain high compared to money market funds. 

Valerie Kramer, Chief Digital Officer at NBH Bank, believes that efficiency is the major reason why banks find stablecoins attractive. 

If you look at what we’re trying to do, giving clients access to payments 24x7x365, this is how you can leverage USDF. Real-time reduces friction. We know there are many options out there, but we want to provide our clients with a safe foundation to do this, with a bank versus a non-bank solution. Using USDF exclusively minted and exchanged by customers and clients of consortium member banks provides a safe alternative to non-bank players who may play in other stablecoins.

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It is expected that the current move by MUFG would be emulated by other banks to accelerate the adoption of the crypto ecosystem. 

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