Japan's largest bank relies on these four blockchain networks

Crypto acceptance

Mitsubishi UFJ Trust (MUFJ) plans to launch a platform that will allow banks to issue their own stablecoins on various blockchain networks.

A new crypto law in Japan gives banks and financial institutions the right to issue stablecoins. Mitsubishi UFJ Trust, a subsidiary of the company, is now planning to launch a platform that will allow banks to issue stablecoins. With the platform, banks will be able to use Stablecoins, which are linked to different currencies, initially on the Ethereum, Avalanche, Cosmos and Polygon blockchain networks. Multiple blockchain networks will be added in the future.

The goal is to speed up the settlement process of interbank transactions. Stablecoins would allow individuals and businesses to transfer money to each other without using Japan's interbank settlement system. Millions of U.S. dollars could be saved this way, and settlement of transactions could take place in near real-time on the various blockchain networks. The issuance of stablecoins backed by U.S. dollars or euros could attract interest from companies looking to start reducing their transaction costs. To put this in perspective: The business payments market is about a quadrillion yen a year, which is currently equivalent to just under US$7.2 trillion. Therefore, the blockchain networks that will become part of this market in the future could benefit from the application of the Stablecoin project.

MUFJ's approach is similar to that of U.S. bank JPMorgan's JPM Coin, which aims to speed up payments such as bond transactions. Exactly when MUFJ plans to release the Stablecoin platform is so far unclear.

How blockchain networks benefit

The future integration of MUFG's stablecoin platform on the Ethereum, Cosmos, Avalanche and Polygon blockchains can be seen as a positive sign for the widespread use of cryptocurrency. The support of a major bank like MUFG increases the legitimacy of and confidence in crypto. This is important because concerns about security and stability are often a barrier to the acceptance of cryptocurrencies.

Moreover, the integration of bank-backed stablecoins could increase the acceptance of cryptocurrencies by institutional investors and large corporations. The availability of a stable digital currency issued by a trusted bank only facilitates the entry of traditional financial institutions into cryptocurrencies. Thus, this could lead to greater institutional acceptance and begin to boost confidence in cryptocurrencies as an asset class.

Another benefit lies in a broader area. The integration of the MUFG Stablecoin platform opens up new possibilities for applications and services on the aforementioned blockchain networks. This can lead to innovative financial products, payment solutions and DeFi applications that facilitate people's daily lives, further simplifying the use of cryptocurrencies.