Cryptocurrency NewsMUFG Partners with JPYC for Stablecoin Services

MUFG Partners with JPYC for Stablecoin Services

MUFG, known as Japan’s largest financial institution and the second-largest global bank holding company, has just announced a partnership with JPYC, a stablecoin backed by the Japanese yen. This collaboration is set to introduce a range of new services centered around stablecoins, including cross-border payments.

In this joint venture, MUFG will be integrating JPYC into its tokenization platform called Progmat, as disclosed in their recent announcement. Progmat, which MUFG launched earlier this year in partnership with prominent players in the industry like SBI Holdings, Mizuho Trust and Banking, Sumitomo Mitsui Trust Bank, and NTT DATA Corporation, serves as a platform for issuing and managing digital assets and boasts over 200 member entities.

The key development here is that JPYC will leverage Progmat to issue a stablecoin backed by the Japanese yen, aligning itself with the latest stablecoin regulations. Specifically, JPYC aims to position itself as a stablecoin designed for fund transfers, falling into one of the three stablecoin categories defined by recent regulations that took effect in June. The other two categories encompass deposit-backed tokens issued by banks and trust-type stablecoins, which necessitate the involvement of a trust bank.

JPYC, being a fund transfer stablecoin, has already applied for the required license, albeit with a limitation on the remittance amount, which is capped at a million yen ($6,811). In contrast, the other two stablecoin categories do not have transaction limits. JPYC’s aspiration is to transition into a trust-type stablecoin, and this is where the partnership with MUFG comes into play. MUFG will act as the trust bank responsible for holding reserves, while JPYC’s stablecoins will be issued on the Progmat tokenization platform.

Furthermore, this collaboration is expected to expand into facilitating cross-border transfers in the future. In Japan, foreign stablecoin issuers are only allowed to operate after obtaining a Japanese Electronic Payment Instrument Exchange Service Provider license, which most have yet to secure. The plan is to enable Japanese users to seamlessly convert their yen-backed stablecoins into USD stablecoins through a foreign exchange transaction once all the necessary components are in place.

MUFG has been actively researching the use of stablecoins in the foreign exchange market for several months. A November study involved the issuance of a yen-backed stablecoin called XJPY, along with a dollar-backed counterpart called XUSD, aimed at improving settlements within the digital asset ecosystem.

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