To boost the adoption of Web3 technologies and digital assets in Japan, the cryptocurrency exchange Binance and Japan's largest bank, the Mitsubishi UFJ Trust and Banking Corporation (MUTB), have announced a joint study to explore the issuance of stablecoins in Japan.
Collaborative Effort to Issue Fiat-Backed Stablecoins
The collaborative effort seeks to issue yen and other fiat-backed stablecoins to revolutionize the financial landscape in the country. The initiative will leverage a platform called "Progmat Coin". It is designed to comply with Japanese regulatory standards for stablecoin issuance and management. The "Progmat Coin" platform, developed by the Japanese bank, will serve as critical infrastructure for issuing these compliant stablecoins.
This endeavor aligns with Japan's recently revised and enforced Payments Services Act, which permits Japanese banks and regulated crypto providers to issue stablecoins. It will also facilitate seamless cryptocurrency transactions for retail investors. Additionally, stablecoins are seen as a crucial component in the successful adoption of Web3 technologies.
Initially supporting stablecoin issuance on the Ethereum blockchain, the platform's capabilities may expand to include BNB Chain, with the Binance partnership. This expansion could further diversify the stablecoin offerings in Japan. Takeshi Chino, the General Manager of Binance Japan, emphasized the importance of stablecoins in the broader financial ecosystem. He noted that stablecoins enable lower-cost and instantaneous cross-border trade settlements for businesses.
Optimism Surrounds Japan's Stablecoin Market Potential
Tatsuya Saito, the Vice President of Products at MUFG, expressed optimism about the potential of Japan's stablecoin market. It is estimated that its growth potential to reach as high as $34 billion (5 trillion yen). This projection would account for approximately 27% of the estimated global stablecoin market, which is currently valued at $123.7 billion, according to CoinGecko.
Binance has encountered regulatory challenges in Western markets. However, it took a significant step towards serving the Japanese market by offering 34 tokens at the launch of its services in August 2023.
Meanwhile, Japan's Orix Bank is considering plans to issue stablecoins within the country. Orix aims to commence testing stablecoins denominated in yen, dollars, and other fiat currencies in October, with a targeted launch date in 2024. These stablecoins will be backed by fiat deposits, utilizing the Japan Open Chain blockchain developed by Tokyo-based G.U. Technologies and its partners.
Japan appears well-positioned to pioneer the adoption of stablecoins for payment rails. It is demonstrated by several financial institutions and startups exploring similar initiatives. In August, it was reported that the Japanese blockchain startup Soramitsu has been exploring the development of a new stablecoin exchange for a cross-border payment system spanning Asian countries.
Additionally, the Japanese government has signaled its intention to permit startups to raise public funds through the issuance of cryptocurrency assets and stablecoins. These developments underscore Japan's commitment to embracing the potential of stablecoins and blockchain technology in its financial ecosystem.
As Binance and MUTB embark on their collaborative journey to issue stablecoins in Japan, the partnership is poised to reshape the country's digital financial landscape and advance the adoption of Web3 technologies in the region.
Binance Raises Concerns over MiCA Regulation's Impact on Stablecoins
In a recent Finance Magnates report,Binance voiced its concerns regarding the impending Market in Crypto Asset (MiCA) regulation and its potential impact on stablecoins. Scheduled to take effect in June 2024, MiCA's provisions on stablecoins have raised uncertainties for the cryptocurrency exchange.
During an online public hearing hosted by the European Banking Authority (EBA), Marina Parthuisot, the Head of Legal at Binance France, expressed apprehension about the lack of project approvals. She warned that Europe might face a delisting of all stablecoins by June 30. This move could significantly affect the European crypto market compared to the global landscape.
The European Banking Authority (EBA) and the European Securities and Markets Authority (ESMA) work on refining MiCA details. However, concerns remain about how the regulation will apply to decentralized and foreign issuers. Stablecoins, designed to provide stability amidst crypto volatility. They are closely watched as they navigate these regulatory waters.
Separately, Binance's CEO, Changpeng Zhao ("CZ") refuted rumors of stablecoin delisting. However, he emphasized the ongoing efforts to launch fully compliant EUR and other stablecoins.
