Ginco‘s stablecoin experiment with Mitsubishi UFJ Trust Bank & Progmat

Ginco, Mitsubishi UFJ Trust and Banking, and Progmat are starting a joint study to introduce an “infrastructure stablecoin” with the aim of improving the settlement efficiencies among the players in the crypto asset market by leveraging the "Progmat Coin" platform: a stablecoin issuance and management platform that is fully compliant with the Japanese stablecoin regulations.

This collaboration aims to issue two stablecoins by the summer of 2024: “XJPY”, denominated in JPY, and “XUSD”, denominated in USD, to improve the efficiencies of cross-border settlement transactions in the crypto asset industry.

Project participants include leading crypto asset liquidity provider Cumberland, one of Japan’s leading crypto asset exchanges, bitbank, and Mercoin.

Background and Objectives

Ginco has been providing cutting-edge infrastructure services in the Web3 space since its foundation in 2017, with a strong mission to establish an infrastructure where everyone, be it individual or enterprise, can interact with digital assets with ease and without worrying about security. It offers an enterprise-grade wallet (Ginco Enterprise Wallet) for financial institutions and crypto asset exchanges, and retains the highest wallet share in the Japanese enterprise crypto market.

Mitsubishi UFJ Trust Bank and Progmat are leading the development of the “Progmat Coin” infrastructure to help issue regulatory-compliant stablecoins in accordance with the revised Payment Services Act, which took effect in June 2023. Various stablecoins built on top of the Progmat platform are to be launched and released upon the intermediaries’ license registrations.

While stablecoin settlements are common among global exchanges and liquidity providers, fiat settlement is still the main method used by Japanese players. Japan’s domestic crypto trading market in recent years is estimated to be thousands of billions of JPY, and is expected to grow further. While there is a potential for growth, there is a lack of infrastructure to support the growth, limitation on trading hours, and the burden for cost of transactions. This joint study started off with the belief that the current market needs solutions to these issues.

Through the study, Ginco, Mitsubishi UFJ Trust Bank and Progmat aim to address the market’s pain points by issuing infrastructure stablecoins “XJPY” and “XUSD” on a public blockchain leveraging the “Progmat Coin” platform to support crypto asset exchanges and liquidity providers with their daily inter-party transactions and settlements, with a goal to help enhance the payment mechanisms in the crypto market through the use of the stablecoins.

Issuance Structure

Under the revised Payments Services Act enacted in June 2023, there are three options for issuing stablecoins (legally termed as “Electronic Settlement Method”):

• “Bank deposit-backed digital money”,
• Stablecoins issued by licensed fund transfer service providers (“fund-transfer type”), and
• Stablecoins issued through trust banks (“trust-type”).

Based on the characteristics summarized below, the joint study will be based on the “Trust-type” stablecoins which both parties believe have the advantages in terms of flexibility in issuance and usability.

• Type of Electronic Settlement Method: Item 3 (Beneficial interest in specific trusts)
• Issuance Applicant (Entrustor): Ginco Inc.
• Issuer (Trustee): Mitsubishi UFJ Trust and Banking Corporation
• Platform: Progmat Coin
• Users (Beneficiaries): Crypto asset exchanges and liquidity providers
• Management of the underlying assets (cash deposits): Any financial institution
• Currency of underlying assets: JPY and USD
• Name of stablecoin: “XJPY (JPY-denominated)” and “XUSD (USD-denominated)”

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