MUFG partners with DataChain to explore Progmat stablecoin interoperability – Ledger Insights

Japan’s largest bank, MUFG, wants the Progmat Coin stablecoin platform to be usable by other banks and on multiple DLT networks. So it has partnered with Japanese blockchain interoperability startup DataChain.

MUFG originally developed Progmat as an enterprise blockchain network for tokenized securities, including bonds, stocks and other digital assets. But it additionally unveiled Progmat Coin as a platform for creating stablecoins backed by segregated funds held in a Trust, with the aim of other institutions also creating fungible stablecoins.

The bank recognizes that Progmat is not the only game in town, so it wants organizations to use Progmat Coin to settle security token transactions on Progmat and other blockchain networks.

The “other blockchain networks” means that Progmat Coin must be interoperable.

An important advantage of tokenized assets is to remove counterparty risk through atomic settlement or delivery against payment (DvP), enabled by cash on the ledger. DvP settlement is planned to go live on Progmat in 2023, with cross-chain settlement targeted for 2024. The first attempts are for interoperability between R3’s Corda enterprise blockchain, on which Progmat is based, and Ethereum-based permission DLT Quorum.

Japan is one of the most active jurisdictions when it comes to security tokens. Most of them have been for real estate and bonds, and Progmat is the leading issuance platform, having issued more than ¥30 billion ($207 million). Next year, SBI plans for the Osaka Digital Exchange (ODX) to offer a secondary market for security tokens. SMBC, Nomura and Daiwa are also investors in ODX.

MUFG has not stopped at security tokens and stablecoins. As previously reported, it supports utility tokens on Progmat and partners with Animoca Brands for NFTs. Since NFTs are usually on public blockchains, the future goal is to use Progmat Coin to settle NFT transactions.

While DataChain may not be a household name, it has relationships with NTT Data and JCB, Japan’s version of Visa. It is also the initiator of a Hyperledger Labs interoperability framework YUI.

Unsurprisingly, YUI will be used in this project, along with IBC, the Inter-Blockchain Communication Protocol that underpins the Cosmos network. A third plank of the solution is DataChain’s Light Client Proxy (LCP) for cross-chain bridges.

DataChain is not the only Japanese company making a significant contribution to cross-chain interoperability. Fujitsu co-founded Hyperledger Cactus, which was recently renamed Cacti.