The digital securities exchange that Mitsubishi plans to launch will compete with the Tokyo Stock Exchange
Despite its highly volatile nature, the cryptocurrency has managed to carve a niche for itself. Despite the risk, more and more people are willing to invest in it. This has given a kind of acceptance to the world of these virtual currencies, which until now has been mainly powered by private crypto coins. With their increasing acceptance, many central banks are now looking at them holistically and focusing on their potential. This spirit of developing ‘trust’ has prompted private institutions to venture into the new industry to see how they can capitalize on the emerging sector as quickly as possible.
The latest to join the bandwagon is Japan’s largest financial institution, Mitsubishi UFJ Bank. Mitsubishi’s trust arm has announced plans to launch a yen-pegged stablecoin called “Progmacoin” in 2023.
Why now?
According to the company’s announcement, Reported First, the stablecoin will be used by Nikkei for clearing and settlement of bank-related digital securities. The need for ProgmaCoin to settle transactions in digital securities arose as the bank plans to launch a digital securities exchange later this year in partnership with Japan’s SBI Group and Daiwa Securities. It seeks a way to settle transactions quickly, without waiting for the bank to record the data in the ledger at the end of the day, which usually happens.
Blockchain technology improves upon that and transaction data is immediately automatically recorded in the ledger and visible to all. It also reduces the cost of transactions on the exchange.
The digital securities exchange that Mitsubishi plans to launch will compete with the Tokyo Stock Exchange.
What is a stable coin?
Cryptocurrencies that are backed by real-world assets such as gold, fiat money (government-issued) and valuables are classified as stable coins. They tend to be less volatile than popular coins such as Bitcoin, Ethereum and Dogecoin. Simply put, stable coins are a bridge between fiat currency and crypto coins. They have a valuation similar to that of fiat currency, but offer the usefulness and mobility of a cryptocurrency.
Is this a new type of cryptocurrency?
No. For example, the planned Progmacoin is not the first stable coin. Many stable coins have previously been linked to other currencies. Tether is an example of a stable coin, pegged to the US dollar.
In Japan too, the stablecoin has been launched first. Japan’s central bank is already planning to test its yen-pegged digital currency this year. It is tentatively referred to as “DCJPY”. Then, there is the one announced by the trading firm Mitsui & Co, known as ZipangCoin, the stablecoin will be pegged to gold instead of the yen.
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