On Monday it was reported that MUFG is launching a stablecoin where each coin will be backed one-for-one by a Yen. However, MUFG’s Progmat Coin is a platform instead of a single bank’s coin. Unlike some U.S. initiatives that look to tokenize bank balances, Progmat Coin is taking a path similar to public stablecoins. Transfers are not mirrored by interbank payments.
Japan’s biggest bank has already developed a blockchain-based security token platform Progmat. The Progmat Coin was originally designed to enable securities settlement on Progmat, but the use cases are far broader. It also intends the stablecoin to be used on other security token networks, to settle NFT and crypto asset transactions as well as for embedded finance. Progmat Coin will be interchangeable with central bank digital currencies (CBDC) and other private digital currencies.
The system involves multiple issuers responsible for pools of money, with each looked after by a trustee. MUFG will be one of the issuers, but it intends there to be several others. Each pool of money is isolated in a trust, so if the issuer or an intermediary goes bankrupt, the funds should still be safe. As a result, all the funds are considered interchangeable. In some ways, it’s more similar to e-money.
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