Mitsubishi UFJ Financial Group (MUFG) Leads Tokenization, Progmat System Expected to Commercialize by 2024

Japan's largest financial institution, Mitsubishi UFJ Financial Group, Inc. (MUFG), has announced the successful completion of cross-chain experiments using the Progmat blockchain infrastructure developed over several years. The trials involved settling digital securities transactions with stablecoins, with plans to commercialize the technology by 2024.

MUFG's Self-Developed Progmat

Progmat is a blockchain infrastructure for digital securities settlement using stablecoins. Consequently, MUFG has developed the Progmat Coin to serve as the infrastructure supporting stablecoins from multiple regulated issuers.

The image below shows MUFG utilizing stablecoins for cross-chain settlement of digital securities, with the Corda blockchain layer on the left handling the stablecoin Progmat Coin, the Quorum platform on the right managing digital securities, and the Cross Framework in the middle facilitating atomic settlement, akin to traditional finance's Delivery Versus Payment (DVP) settlement.

MUFG has completed phase testing and is expected to verify it by the end of this year based on the contract notice from the PTS proprietary trading system, with the goal of commercializing the system by 2024.

According to Ledger Insights, Progmat will evolve into a joint venture in the future, with participants including other major banks and exchanges such as Mizuho Bank, SMBC, JPX, and SBI. By the end of 2022, 40 billion yen, approximately $300 million USD, of digital securities have been issued on the Progmat network.

Japanese Stablecoin Legislation

Japan passed stablecoin legislation last June, establishing the legal status of stablecoins as digital currencies that must be pegged to the Japanese yen or other fiat currencies, ensuring holders have the right to redeem at face value.

Furthermore, the legislation stipulates that stablecoins can only be issued by licensed banks, registered money transfer agents, and trust companies.

MUFG publicly stated last year that once regulations are in place, they will issue their stablecoin, Progmat Coin. This stablecoin will be backed by Japanese yen held in a trust account and will ensure redemption based on market value.

MUFG's Vice President and future CEO of Progmat, Tatsuya Saito, stated:

Our goal is to lead the global trend of tokenizing real-world assets and collaborate with our technology partner Datachain to commercialize it by 2024.

Similar efforts are being made in the U.S. by JPMorgan Chase: RWA | JPMorgan Onyx Blockchain, realizing killer applications for traditional finance.