MUFG and KlimaDAO Team Up to Revolutionize Carbon Credit Transactions with Stablecoins

Japan's largest bank, MUFG, has partnered with KlimaDAO Japan to offer the use of JPYC stable coins for carbon credit settlement. This initiative builds on Progmat's blockchain platform, which aims to optimize and improve the carbon credit market.
KlimaDAO, known globally for its pioneering work in tokenizing carbon credits, offers a platform for individuals to buy and retire these credits. Last year, KlimaDAO expanded its reach with Carbonmark, a trading platform that integrates blockchain technology with traditional financial systems such as wire transfers and SAP to provide a convenient experience for corporations.
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In Japan, carbon credits are managed under the national J-credits scheme, and the Tokyo Stock Exchange manages the secondary market. However, market activity remains relatively low. KlimaDAO Japan plans to revive this market by launching the KlimaDAO Japan Market, which will facilitate domestic companies' purchase and use of credits through the tokenization of J-credits, dubbed D-Carbons. Initially, these transactions will be settled using bank payments, but the plan is to switch to stablecoins such as JPYC in the future.
JPYC, in effect since 2021, currently functions only as a prepaid monetary instrument. However, with the new stablecoin legislation in Japan, JPYC may become a licensed money transmitter or issue trust-type stable coins with MUFG as a trustee. Last year, JPYC partnered with MUFG, the blockchain platform Progmat Coin developer, to support several stablecoin issuers. This partnership includes integration with Kansai Electric's subsidiary Optage.
Going forward, the partnership aims to bring Japanese D-carbons to the global market through Carbonmark and integrate foreign issuers into the stablecoin market. This ambitious plan will be implemented in phases: initial proof of concept began in April, while the second phase, which will involve JPYC, is expected to start by the end of the year.
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Interestingly, KlimaDAO Japan mentions using a permissionless blockchain for the project but does not specify whether it will use Polygon or Japan's own blockchain. Meanwhile, Progmat Coin, built on R3's Corda enterprise blockchain, connects to various public blockchains through a collaboration with Datachain and its offshoot TOKI.