Datachain, Mitsubishi UFJ Trust and Banking Corporation, and SORAMITSU Announce a Technology Alliance to Enable Smooth Mutual Transfer and Exchange of a Wide Variety of Stablecoins to be Issued in Japan

Datachain, Inc. (headquartered in Minato-ku, Tokyo; Tetsushi Hisata, President; hereinafter “Datachain”), Mitsubishi UFJ Trust and Banking Corporation (headquartered in Chiyoda-ku, Tokyo; Iwao Nagashima, President; hereinafter “Mitsubishi UFJ Trust and Banking”) and SORAMITSU Co., Ltd. (headquartered in Shibuya-ku, Tokyo; Kazumasa Miyazawa, President & CEO; hereinafter referred to as “SORAMITSU”) launched a technical alliance on March 28 to realize smooth mutual transfer and exchange between a wide variety of stablecoins to be issued in Japan.

In this initiative, we will conduct proof of concept using various stablecoins issued using the stablecoin issuance and management platform “Progmat Coin” led by Mitsubishi UFJ Trust and Banking, and regional digital currencies by regional banks which are being considered using open source blockchain platform Hyperledger Iroha that Soramitsu contributes to development. For interconnection between different blockchains, we plan to use YUI, IBC, LCP, etc., which are contributed by Datachain.

In 2022, Japan led the world’s developed nations in passing a revision of the Payment Services Act defining a stablecoin as an “Electronic means of payment.” The bill is scheduled to go into effect in 2023, creating excitement in what could be called the “first year of stablecoin.”

In light of such trends, this initiative aims to realize the mutual transfer of different digital money (PVP settlement) on a heterogeneous blockchain infrastructure using stablecoins issued using Progmat Coin, a stablecoin issuance and management platform led by Mitsubishi UFJ Trust and Banking Corporation, and local digital currencies issued using Hyperledger Iroha that SORAMITSU contributes to development.

This will enable smooth mutual transfers and exchanges among the various stablecoins and local digital currencies planned to be issued by various banks and other institutions in the future, aiming to improve efficiency and reduce fees for interbank, business, and personal remittances. In the future, we will also consider cross-border remittance efficiency and fee reductions through mutual transfers and exchanges with overseas CBDCs, etc.

Progmat Coin, a stablecoin issuance and management platform led by Mitsubishi UFJ Trust and Banking Corporation, uses Corda as a distributed ledger for transfer records, in compliance with the new legislation that will begin in 2023, through a trust scheme. We plan to issue both “Permissioned stablecoins” and “Permissionless stablecoins” using so-called public blockchains such as Ethereum.

SORAMITSU has contributed to the development of Hyperledger Iroha, an open-source blockchain platform led by The Linux Foundation, and Hyperledger Iroha has been used as a platform for issuing CBDC and local digital currencies in Japan and overseas, including the official launch of the Central Bank Digital Currency “Bakong” in the Kingdom of Cambodia and CBDC proof of concept called “DLAK/Digital Lao Keep” in Lao PDR. SORAMITSU is also working with the Asian Development Bank (Philippines) and other organizations to connect different blockchains and conduct proof of concept for international securities settlement.

In order to achieve mutual transfer of multiple stablecoins / digital money on different blockchains such as Corda and Hyperledger Iroha, technology is needed to interconnect both blockchains and execute transactions on both blockchains simultaneously.

To facilitate the interconnection of multiple blockchains, it is planned to use blockchain interoperability projects led by Datachain such as “YUI,” as well as messaging protocol “IBC” adopted by YUI and middleware “LCP” that enables interoperability with excellent scalability in addition to security.

https://github.com/hyperledger-labs/yui-docs

https://medium.com/lcp-network/lcp-a-proxy-for-light-client-verification-to-realize-trust-minimized-and-gas-efficient-f7d5868e4b0

Stablecoins are expected to minimize friction in the settlement of securities and other digital assets and NFTs, as well as to be used for international remittances and micropayments, thereby improving the convenience of various payment scenarios.

By connecting different blockchains in a secure and practical way, we will maximize the potential of stablecoins and build the world’s most advanced use cases to create a financial infrastructure that will be used globally.

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