Japan’s largest bank, MUFG, plans to launch its own digital currency and add a cryptocurrency exchange to its growing list of blockchain-related services.
MUFG to Launch Cryptocurrency Exchange
Mitsubishi UFJ Financial Group (MUFG), which also ranks as one of the five largest banks in the world, intends to become the first Japanese bank to open a licensed cryptocurrency exchange, according to a report from The Mainichi, a media outlet based in Tokyo.
Following its launch later this year, MUFG plans to use the exchange as a platform to issue MUFG Coin, a yen-pegged token that will operate on a private blockchain controlled by the bank.
Strictly speaking, MUFG Coin’s value will not be directly fixed to the yen, because Japanese financial services regulations require that transfers of more than one million yen (~$9,000) be conducted through a bank.
Consequently, a crypto-token that was truly pegged to the yen could not operate as a fully-functional currency.
Instead, the bank will “suppress” the price of MUFG Coin on its exchange to ensure that each token is always worth approximately one yen while also retaining the currency’s utility as a payment mechanism.
The report said that MUFG has already informed Japan’s Financial Services Agency (FSA) of its plans to open the exchange and use it to issue MUFG Coin, although the bank has not officially submitted an application for licensure.
MUFG has not revealed what other cryptoassets, if any, will trade on its exchange alongside MUFG Coin.
However, the bank has announced the creation of a custodial service for bitcoin traders. Customers who opt-in to the service will have their holdings placed in segregated accounts that are separate from the exchange’s assets, and these assets will be guaranteed by the trust bank in the event that they are compromised.
Although this service will be available to traders at all participating bitcoin exchanges, it would seem likely that MUFG would seek to integrate it into its own service as well.
Japanese Banks Race to Issue Digital Currencies
Notably, MUFG is not the only bank in cryptocurrency-friendly Japan that intends to issue its own digital currency.
A consortium led by Mizuho Financial Group has announced that they will issue the yen-pegged J-Coin later this year.
Mizuho has said that one of its chief priorities is integrating J-Coin with Alibaba’s Alipay mobile payment platform.
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