MUFG (NASDAQ: MUFG) has announced a partnership with JPYC, the yen-backed stablecoin, that will unlock new stablecoin-based services, including cross-border payments.
MUFG, Japan’s largest financial institution and the second-largest bank holding company globally, will integrate JPYC into Progmat, its tokenization platform, according to a recent announcement.
MUFG launched Progmat in early September this year in partnership with other industry heavyweights, including SBI Holdings (NASDAQ: SBHGF), Mizuho Trust and Banking, Sumitomo Mitsui Trust Bank, and NTT DATA Corporation. It offers a digital asset issuance and management platform for over 200 members.
In the latest announcement, MUFG revealed that JPYC will use Progmat to issue yen-backed stablecoin as the project seeks to align with the recent stablecoin regulations.
JPYC intends to position itself as a funds transfer stablecoin, one of three types of stablecoins under the new laws that came into effect in June. The other two types are deposit-backed, bank-issued tokens and trust-type stablecoins, which require the involvement of a trust bank.
As a fund transfer stablecoin, JPYC is mandated to obtain a license, which it has already applied for, according to local media reports. However, this type of stablecoin is limited to a remittance amount of a million yen ($6,811).
The other two types have no transaction limit, and JPYC is looking to transition into a trust-type stablecoin. The partnership with MUFG will greatly aid this course as the banking behemoth would act as the trust bank that holds the reserves, and the stablecoins would be issued on its Progmat tokenization platform.
The partnership will extend to cross-border transfers in the future. In Japan, foreign stablecoin issuers can only operate after obtaining a Japanese Electronic Payment Instrument Exchange Service Provider license, and most haven’t yet. The plan is to allow Japanese users to convert their yen-backed stablecoins for USD stablecoins in a seamless foreign exchange transaction once all the pieces are in place.
MUFG has been studying the use of stablecoins in the FX market for months. One study in November involved the issuance of a yen-backed stablecoin, XJPY, and a dollar-backed counterpart, XUSD, to enhance settlements in the digital asset world.