The financial services company – Mitsubishi UFJ Trust – hopes to improve its transaction system by using blockchain technology for trading and a cryptocurrency for payments. As such, it will create a stablecoin pegged to the value of the Japanese yen, according to a new report.
Mitsubishi’s Stablecoin
According to a recent report by Nikkei Asia, Mitsubishi UFJ Trust – a Tokyo-headquartered bank with over $1.5 trillion in assets under management – is seeking to enter the world of crypto by issuing a digital asset of its own. The financial product will be a type of stablecoin pegged to Japan’s national currency.
The token will allow the institution to boost its payment process, by instantly settling securities transactions. Currently, these monetary procedures take a few days and cost tens of millions of dollars per year in Japan. Many expect that using a stablecoin can eliminate these costs.
Additionally, the initiative should propel the employment of blockchain technology in securities trading. The Japanese Trust Bank has promoted its use in partnership with Daiwa Securities and SBI.
Digital securities allow investments in a more flexible format. For example, blockchain technology has turned traditional assets such as real estate or corporate bonds into products that can be purchased in small amounts, opening doors for retail investment.
Japan – one of the most developed economies globally – is a key player in the cryptocurrency industry. At the same time, locals have displayed a growing interest in the asset class recently. In 2021, digital transactions marked more than 50% increase than 2020 and reached over 103 trillion yen ($900 billion).
Stablecoins could be subject to strict regulation
It’s safe to assume that Mitsubishi’s UFJ Trust project could encounter regulatory backlash ahead of launch. Last summer, some Japanese officials felt that stablecoins could harm the Japanese financial ecosystem and, for this reason, they should be strictly monitored.
“Japan can no longer leave things unattended with global developments over digital currencies moving so rapidly,” one of them stated.
In 2020, the Financial Services Agency (FSA) created a division to oversee cryptocurrency regulation. Shortly thereafter, the Ministry of Finance considered increasing the necessary staff.
The possible regulation might favor Japan’s central bank, which aims to issue a CBDC. Trials are expected to start sometime this year, while the product’s initial release might come around 2026, Governor Haruhiko Kuroda outlined.
