Blockchain for Banking News

MUFG collaborates with Soramitsu for Progmat stablecoin interoperability

digital currency interoperability yen

Today a four way Japanese collaboration was unveiled for digital currency interoperability between MUFG, the MUFG-founded Progmat Coin platform, Soramitsu and Datachain. Together they plan to conduct a Proof of Concept for the interoperability of bank-issued stablecoins and regional digital currencies running on different blockchains.

With Japan’s stablecoin regulations coming into force this year, the aim is to garner payment efficiencies and lower fees for interbank payments, as well as consumer and personal transfers. Another potential benefit is conducting 24/7 transactions rather than being limited by bank opening hours.

A year ago, MUFG unveiled Progmat Coin, a platform that aims to support native bank-issued stablecoins from multiple issuers. It wants these to be used as settlement assets for security tokens, to pay for NFTs and crypto asset transactions, so interoperability needed. Hence it partnered with interoperability firm Datachain last September. Progmat runs on R3’s Corda enterprise blockchain.

There was also future plans to issue stablecoins on the public version of Ethereum.

Separately, Japan’s Soramitsu is known as the original developer of the Hyperledger Iroha blockchain used by the high profile Bank of Cambodia’s digital currency Project Bakong which has been in production since 2020. Soramitsu is also involved in multiple other digital currency initiatives in the region, including Laos and the Philippines as well as some Japanese regional digital money initiatives. It first partnered with Datachain for interoperability in 2021.

The latest project aims to enable interoperability between Progmat/Corda-based currencies and Iroha ones, initially targeting those used in Japan. A future iteration will explore cross border payments. 

Conceptually, money does not move across blockchains. It stays on the same one but the ownership changes. However, if you exchange a digital currency on one blockchain with money on another blockchain, the transactions on both chains must happen atomically. In other words, they happen at the same time, and if one leg of the transaction fails, they must both fail.

Datachain is the initial developer of YUI, an interoperability protocol that is a Hyperledger Lab. The company has also worked with Japanese card company JCB on blockchain interoperability.

Image Copyright: Ledger Insights