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Japan’s Biggest Bank Explores Global Stablecoin IssuanceMitsubishi UFJ Financial Group Inc. (MUFG), the largest bank in Japan, is currently engaged in discussions with companies involved in popular global stablecoins, as well as other firms, to explore the possibility of issuing these tokens using MUFG’s blockchain platform.That’s according to a report published by Bloomberg on Thursday. The stablecoin law in Japan, which recently went into effect on June 1, has established that only licensed banks, registered money transfer agents, and trust companies within the country are authorized to issue stablecoins.Photo by CoinWire Japan on UnsplashProgmat platformMUFG is actively in talks with various parties regarding the utilization of its blockchain platform, Progmat, to mint stablecoins linked to foreign currencies, including the US dollar, with the intention of facilitating their global use.Tatsuya Saito, the Vice President of Product at MUFG, emphasized that the implementation of the legislation provides issuers and users with a sense of security when it comes to engaging with stablecoins. However, he refrained from disclosing the specific stablecoin parties that MUFG is currently in discussions with.Stablecoins play a pivotal role within the cryptocurrency sector, serving as a reliable asset for investors to hold between trades involving more volatile tokens. These tokens are designed to maintain a consistent value, often pegged to $1, and are typically backed by reserves such as cash and bonds. CoinGecko data indicates that approximately $130 billion worth of stablecoins are presently in circulation.Stablecoin stabilityNevertheless, stablecoins have faced challenges in the past when it comes to maintaining their pegs, resulting in disruptions within crypto markets. Notably, TerraUSD, a token reliant on algorithms and trader incentives, experienced a significant crash in May 2022, leading to losses of at least $40 billion. In response to such incidents, regulators have intensified their scrutiny of stablecoins. The stablecoin law in Japan encourages the issuance of stablecoins that are fully backed by fiat cash in a corresponding currency.MUFG envisions leveraging its Progmat blockchain platform to issue security tokens on behalf of third parties, with no immediate plans to develop its own stablecoin, according to Saito. He further revealed that the bank is actively exploring stablecoin projects with entertainment firms, non-financial businesses, and a consortium of Japanese financial institutions. Furthermore, overseas financial groups have shown keen interest, and Saito believes that Japan has the potential to become a global hub for stablecoin issuance.Tether dominanceTether ($USDT) holds the position of the top global stablecoin, accounting for more than 60% of the sector’s market value, while Circle Internet Financial Ltd.’s USD Coin ($USDC) occupies the second spot. Any party intending to produce stablecoins within Japan would need to comply with the country’s legislation.Saito highlighted that the regulation’s provision allowing stablecoins to be denominated in various currencies, including the US dollar, opens up opportunities for the issuance of tokens intended for global use. He expressed his belief that this presents a significant opportunity for Japan.Prime Minister Fumio Kishida’s economic agenda, known as “New Capitalism,” includes a focus on supporting the growth of Web3 firms. While Japan has taken steps to relax certain cryptocurrency regulations, such as those pertaining to token listing and taxation, it continues to be perceived as a country with relatively strict regulations.

South Korea’s Financial Services Commission (FSC) is set to exclude stablecoins from the list of digital assets corporations will be permitted to trade under forthcoming corporate crypto trading guidelines, according to a report by Herald Business.Photo by DrawKit Illustrations on UnsplashThe guidelines will outline the conditions under which listed companies and registered professional investment firms can buy and sell digital assets for investment or treasury management purposes. As regulators move to prevent speculative or indiscriminate investment in the early stages of opening the market to corporations, they have opted to limit the scope of permitted assets. Consequently, U.S. dollar-pegged stablecoins such as USDT and USDC are expected to be excluded from the approved list. Authorities plan to release the trading guidelines after the Digital Asset Basic Act is finalized. This move partly reflects regulatory constraints: stablecoins are not currently classified as cross-border payment instruments under South Korea’s Foreign Exchange Transactions Act. The law requires payments and receipts involving such instruments to be processed through authorized foreign exchange banks, leaving stablecoins outside the regulated framework. Companies seek stablecoins for FX hedgingThis exclusion, however, does not entirely prevent companies from trading stablecoins. Firms can still access them through overseas channels, including external wallets like MetaMask or over-the-counter platforms operated by exchanges such as Coinbase. Currently, South Korean companies cannot open corporate crypto accounts domestically, making it difficult to use digital assets for formal trade settlement. Nevertheless, payments in stablecoins are sometimes still handled through individual or offshore accounts. Given these workarounds, some listed companies with large international trade exposure have petitioned regulators to allow stablecoins under the proposed corporate investment guidelines, according to people familiar with the matter. Advocates argue that stablecoins like USDC can be easily traded on exchanges and track the U.S. dollar in real time, making them a highly effective tool for managing foreign-exchange risk. As the industry awaits this regulatory clarity, the impact is already rippling into the traditional financial sector. Kbank—the banking partner of Upbit, Korea’s largest crypto exchange—recently debuted on the KOSPI benchmark index after two previously failed attempts to go public. According to Bridgenews, Korea Investment & Securities initiated coverage on March 6 with a “neutral” rating, noting that regulatory uncertainty and rising lending competition could limit the bank's near-term growth. However, the brokerage added that the lender’s valuation could improve if it successfully expands its crypto business alongside clearer regulations. Baek Doo-san, an analyst at Korea Investment & Securities, noted that Kbank’s valuation could see re-ratings if the Digital Asset Basic Act and policies promoting the stablecoin industry are implemented quickly. He said that despite potential overhang risks, faster policy progress could drive multiple expansion, adding that the bank could then be valued in line with its peers’ price-to-book ratios. Survey shows persistent market fearThese shifting regulatory sands come at a time when the broader crypto market remains under pressure. According to a weekly survey of South Korean investors conducted by CoinNess and Cratos last week, 24% of respondents expect Bitcoin to rise or surge this week, up from 10.3% in the previous survey. Another 28.1% expect the market to move sideways, compared with 25.5% a week earlier, while 47.9% predict a decline or sharp drop, down from 64.2%. Although bullish sentiment has ticked upward from the previous week, bearish expectations still dominate the overall landscape. When asked about broader market sentiment, 43.4% of respondents said they felt fearful or extremely fearful. About 35.4% described sentiment as neutral, and only 21.2% reported feeling optimistic or extremely optimistic. With safe-haven markets facing renewed uncertainty amid geopolitical tensions between the U.S. and Iran, the survey also explored how a potential correction in South Korea’s stock market might affect cryptocurrencies. The largest share of respondents, 39.7%, believed it would be negative for crypto. Meanwhile, 23.6% said it would benefit Bitcoin exclusively, 23.4% felt it would be positive for the broader crypto market, and 13.3% expected it to have no impact. 

Korea considers legal recognition of virtual assets as trust assets for investor protectionSouth Korea’s Ministry of Justice (MOJ) is assessing whether customers’ virtual assets on cryptocurrency exchanges should be legally recognized as trust assets. This classification would give users priority in claiming their virtual assets in case of an exchange’s bankruptcy, thus strengthening investor protection. There’s a noted concern about potential disputes in such bankruptcy situations, as users’ digital assets are typically considered to be in the custody or storage of these platforms.Photo by Daniel Bernard on UnsplashLegal study by Seoul National UniversityAccording to a Tuesday report by local news outlet ChosunBiz, citing industry and legal sources, the MOJ has initiated a legal study on this subject. The research is being conducted by the Seoul National University R&DB Foundation, which started the project earlier this month.Through this study, the MOJ is expected to examine the legal classification of cryptocurrency as property. This review is significant because, for cryptocurrencies to be held in a trust, they must be legally recognized as property. Meanwhile, the upcoming Virtual Asset User Protection Act, set to come into effect next July, mandates that only cash deposits made by users be segregated from the assets of the exchange itself.In Korea, under the current provisions of the Capital Markets Act, virtual assets are not recognized as being held in a trust. Instead, staked cryptocurrencies are seen as being under custodial management or storage. In such arrangements, only a debtor-creditor relationship concerning virtual assets is acknowledged, differing from the legal framework of a trust.Prioritization of rightsIf a cryptocurrency exchange becomes insolvent and enters liquidation, the current legal framework could end up prioritizing the rights of the exchange’s creditors or shareholders over those of the crypto investors. This situation has faced criticism for its inadequate protection of investors. However, if the crypto assets were considered to be held in trusts, it would enable users to acquire “rights to foreclose outside bankruptcy.” This means users would have the right to receive priority reimbursement for their crypto assets, offering them a higher level of protection in the event of an exchange’s bankruptcy.Regarding this development, an official from the MOJ said that while the study is a fundamental legal review focused on exploring ways to protect users through the application of trusts for various cryptocurrency transactions, including those involving decentralized finance (DeFi), it is too early to provide specific details at this stage.