Technical partnership for stablecoin interoperability announced

Datachain, Mitsubishi UFJ Trust & Banking, and Soramitsu have established a technical partnership to enable exchanges among the wide variety of stablecoins that are expected to be issued in Japan.

In 2022, Japan revised the Payment Services Act to define stablecoins as “electronic payment methods”, which can be issued only by banks, fund transfer service providers, and trust companies (see [1] in the chart above). The bill is scheduled to go into effect in 2023.

Various stablecoins issued using the stablecoin issuance and management platform “Progmat Coin” developed by Mitsubishi UFJ Trust & Banking, as well as local digital currencies that Soramitsu has developed on Hyperledger Iroha, will be supported. Progmat Coin will serve as a distributed ledger for transfer records. Both “permissioned stablecoins” using Corda and “permissionless stablecoins” using so-called public blockchains such as Ethereum will be supported. For interconnection between different blockchains, various protocols developed by Datachain will be used.

As a result, smooth mutual transfers and exchanges between a wide variety of stablecoins and regional digital currencies scheduled to be issued by various banks in the future will be realized, and remittances between banks, companies, and individuals will be made more efficient. In the future, the consortium will also consider improving the efficiency of cross-border remittances and reducing fees through mutual transfers and exchanges with overseas CBDCs.

This article is part of our Tokyo FinTech Publication, please follow us to read more from our writers, like hundreds of readers do every day. Please also register for our short weekly digest, published some Saturdays, at the link below.

Should you live in Tokyo, or just pass through, please also join our Tokyo FinTech Meetup. In any case, our YouTube channel and LinkedIn page are there for you as well.