The financial services company – Mitsubishi UFJ Trust – hopes to enhance its transaction system by utilizing blockchain technology for trading and a cryptocurrency for payments. As such, it will create a stablecoin tied to the value of the Japanese yen, claimed a new report.
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 enable the institution to boost its payment process, instantly settling securities transactions. Currently, such monetary procedures take a couple of days and cost tens of millions of dollars a year in Japan. Many expect that the use of a stablecoin could eliminate those 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 enable 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 quantities, opening the doors for retail investments.
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 Might Face Strict Regulation
It is safe to assume that Mitsubishi UFJ Trust’s project might come upon some regulatory backlash before launch. Last summer, some Japanese officials opined that stablecoins could harm Japan’s financial ecosystem, and for that reason, they should be strictly supervised.
“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) established a division to monitor the regulation of cryptocurrencies. Shortly after, the Ministry of Finance contemplated increasing the personnel needed.
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.
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