Japan’s Largest Bank Collaborates with Binance to Issue Stablecoins
Japan’s Mitsubishi UFJ Trust Bank has partnered with Binance, the world’s largest cryptocurrency exchange, to issue new stablecoins in accordance with new regulations. This collaboration will allow for the launch of yen and US dollar-backed stablecoins by ORIX Bank in 2024.
Binance was chosen as an issuance partner due to its existing license to serve traders in Japan. Other companies can also issue stablecoins once their license applications are approved by the Financial Services Agency of Japan.
Banks Expected to Drive Large Stablecoin Volumes
Mitsubishi’s platform, along with other platforms, will enable the issuance of stablecoins backed by Japanese yen and US dollars on public networks like Ethereum and Polygon. This aligns with Japanese regulations outlined in the Revised Funds Settlement Act.
This legislation, passed in 2022, recognizes stablecoins as a new electronic payment method. Banks, trust companies, and transfer operators can issue stablecoins under this act. However, separate licenses are required for asset-circulating companies.
The Progmat platform developed by Mitsubishi allows businesses to use the coins they issue not only for purchasing non-fungible tokens (NFTs) but also for acquiring digital securities.
Binance Could Receive Much-Needed Inflows
The collaboration between Mitsubishi and Binance comes at a time when stablecoin activity on exchanges is relatively low. According to CCData, trading volumes of Binance’s BUSD stablecoin declined after New York regulators ordered Paxos, the issuer of BUSD, to halt its minting.
Increased business-to-business (B2B) activity in Japan could provide Binance with much-needed liquidity as it faces market share losses in certain Western jurisdictions. The exchange has experienced a 90% decline in trading volumes in the US due to regulatory actions.
In contrast, PayPal’s PYUSD stablecoin, issued by Paxos, saw a 400% increase in trading volume between August and September.
Hot Take: Binance-Mitsubishi Collaboration Boosts Stablecoin Market in Japan
The partnership between Mitsubishi UFJ Trust Bank and Binance to issue stablecoins will have a significant impact on the Japanese market. With the ability to issue stablecoins backed by yen and US dollars, businesses can streamline foreign trade transactions and bypass Japan’s internal banking network. This collaboration also presents an opportunity for Binance to regain liquidity and expand its presence in Japan amid regulatory challenges in other regions. As stablecoins continue to gain traction, we can expect increased adoption and usage in various industries.
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