The Japanese megabank Mitsubishi UFJ Financial Group and domestic blockchain players say they have teamed up to launch a stablecoin interoperability pilot.
In a Mitsubishi UFJ press release, the firm’s trust and banking unit said it was partnering with the Tokyo-based blockchain developer Datachain.
It will also work with a platform called Progmat Coin and the developer Soramitsu.
The latter worked on the Cambodian central bank digital currency (CBDC), with a coin successfully released in 2020.
Mitsubishi UFJ Trust and Banking announced its “technical cooperation” on March 28 to create a system for “seamless transfers and exchanges” between various stablecoins to be launched in Japan.
The bank added that it would conduct a series of “demonstrations” using “regional digital currencies” that are currently “being considered for launch” at regional banks.
The pilot will make use of several Datachain-developed “interconnection” solutions.
These allow “different blockchains” to link.
The new pilot solution, the parties claimed, will allow parties to “boost efficiency” and “reduce fees for inter-bank, inter-company, and interpersonal remittances” when using stablecoins.
Why Does Mitsubishi UFJ Have a Stablecoin Interest?
Last year, Japanese lawmakers voted in favor of stablecoin regulation clauses that have now been inserted into the revised Payment Services Act.
These clauses promulgate later this year. And they classify certain stablecoins as “electronic methods of payment” – effectively granting regulated stablecoins a legal status.
This development will allow banks to launch their own fiat-pegged coins on blockchain networks.
But as different banks are already working on a diverse range of blockchain protocols, interoperability-related questions have been raised.
The central Bank of Japan is also working on a prototype digital yen – which may also make use of blockchain technology.
Key Japanese business players are expanding into the non-fungible token (NFT) and digital securities spaces – again causing possible interoperability problems.
Mitsubishi UFJ Trust and Banking suggested it would also look to improve the efficiency of cross-border remittances adding that it wants to reduce fees by exploring interoperability solutions for “overseas CBDCs.”
It claimed that its solution would “connect different blockchains in a safe and practical way” and create a “financial infrastructure that can be used on a global scale.”
Last year, the bank announced its intention to launch a “digital assets wallet.”
The bank is part of the Mitsubishi UFJ Financial Group – Japan’s largest bank, and one of the largest financial groups in the world.