MUFG, Japan’s largest bank, revealed today its plans to utilize its Progmat Coin solution to issue bank-backed stablecoins on multiple public blockchains. The announcement stated that the supported blockchains would include popular platforms such as Ethereum, Avalanche, Cosmos, and Polygon. However, as the project is still in its early stages, no specific launch timeframe has been confirmed yet.
Progmat Coin Solution
The Progmat Coin solution is not limited to MUFG alone but is designed to facilitate stablecoin issuance by various trust banks. This development comes after recent legislation was enacted, granting Japanese trust banks the authority to issue stablecoins. This regulatory change opens up new avenues for financial institutions in Japan to embrace blockchain-based stablecoin solutions.
MUFG has been actively collaborating with blockchain interoperability startup DataChain and TOKI, a cross-chain bridge solution for public blockchains powered by DataChain’s technology. Their joint efforts aim to facilitate cross-chain swaps, payments, and lending across public blockchains. As an example, the purchase of a non-fungible token (NFT) could be settled using a Progmat Coin on a different blockchain.
TOKI, founded earlier this year in Dubai by a DataChain executive, plans to launch its bridge and introduce its own crypto token later in the year. The company’s approach involves establishing liquidity pools with Progmat Coins on multiple blockchains to enable seamless transactions between them.
Uncertain KYC Requirements
While the primary focus of this solution is the Japanese market, it remains unclear whether users will need to undergo know-your-customer (KYC) compliance measures to hold the stablecoins. The Progmat platform also supports security and utility tokens, with potential cross-bridge capabilities. Notably, the platform has received backing from major Japanese financial institutions, including JPX, Mizuho, SMBC, and SBI, evolving into a joint venture.
Progmat’s core platform relies on R3’s Corda enterprise blockchain, while Datachain’s technology is based on Cosmos’ Inter-Blockchain Communication protocol (IBC). Furthermore, DataChain’s core technology, known as the Hyperledger YUI Lab, has been open-sourced. DataChain has also engaged in a collaboration with JCB, Japan’s equivalent of Visa.
Societe Generale became the first systemic bank to issue a stablecoin on a public blockchain in April with its EUR CoinVertible. However, no transactions have taken place since the initial EUR 10 million issuance. Similarly, Brazilian investment bank BTG Pactual launched a US Dollar stablecoin earlier the same month, marking its entry into the stablecoin market.