Three of Japan’s largest banks said they will jointly issue a stablecoin this financial year, which ends in March. Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMBC) and Mizuho Financial Group will establish a council to explore operational frameworks and prepare for the issuance of stablecoins, according to a statement on MUFG’s website.
The three banks will act as “joint settlors and a trust bank or similar institution will act as trustee,” the statement said. Japan’s Financial Services Agency (FSA) signaled support for the development of a stablecoin by the three banks last November. More recently, the ruling Liberal Democratic Party (LDP) said the state should promote the usage of yen-based stablecoins.
Tokens pegged to the yen represent a negligible share of the market, accounting for less than $50 million in the $311 billion sector. The most prominent is JPYC with a market cap of around $18 million, issued by a Tokyo-based fintech of the same name.
NYSD Pushes for Stringent Regulations
The New York State Department of Financial Services released a proposed regulation for authorized payment stablecoin issuers on June 9, The Block reported on June 10. The proposal would turn stablecoin guidance issued in 2022 into formal regulation and incorporate the GENIUS Act and follow-up federal rulemaking.
The biggest change covers custody of reserve assets. Stablecoin issuers would be required to hold reserves across multiple custodians. The proposal also introduces new redemption-related measures to prevent excessive concentration of reserves at a single custodian.
Risk-management obligations would also be strengthened. Issuers would need to establish frameworks covering security, internal controls and audits, insider trading, and oversight of external service providers.
A dual-authorization system would apply to reserve management. Each month, an issuer’s chief executive officer and chief financial officer would have to certify the accuracy of reserve composition reports. Each year, issuers would also need an attestation from an accounting firm on the effectiveness of internal controls.
Highlighted Crypto News Today:
CertiK Backs Pharos AI Agent Hackathon With Security-Focused Skill Scanner
