Japan’s biggest financial institution, MUFG, is shelving plans for a sweeping digital currency launch. | Source: Shutterstock.com MUFG has given up on launching a standalone ...
MUFG has given up on launching a standalone cryptocurrency and will instead use the digital currency developed in a mobile payments service.
A much-publicized plan by Japan’s biggest bank Mitsubishi UFJ Financial Group (MUFG) to launch a cryptocurrency has been scaled back.
The financial giant will instead use the digital currency in a mobile payments business, according to Nikkei Asia Review. The mobile payment service employing the MUFG Coin as the unit of transactions will be unveiled in partnership with HR firm Recruit Holdings.
Through the service, users will be able to convert money held in their bank accounts into the MUFG coin. Recipients of the MUFG coin will then be able to convert the digital currency to the Japanese Yen or any other currency that their bank account is denominated in. The bank accounts will not necessarily have to be held at MUFG.
Per the Yomiuri Shimbun, the two partners set up a joint venture in October. Recruit Holdings will hold the majority stake in the JV while Japan’s biggest bank will take a minority stake.
The mobile payment service is expected to be launched in next year’s first half. Currently, the two firms are awaiting regulatory approval. They are seeking a fund transfer service provider license.
Besides in MUFG’s banking halls, the mobile payment service available at Recruit’s associate firms. The HR firm owns the Indeed online recruitment tool and employer review website Glassdoor. Recruit Holdings also operates other internet properties in the hospitality sector.
Other than retail users, MUFG coin will also be eventually rolled out to corporate customers. Though there are already highly successful mobile payment services in Japan, MUFG will be banking on its wide reach. Currently, it boasts of 34 million retail customers and 1.3 million corporate clients.
The pivot to a mobile payment service by MUFG comes more than a year of speculation regarding the bank’s cryptocurrency plans. In 2018 reports indicated that the bank would be trialing its stablecoin starting this year.
This has not materialized so far. At the time, MUFG’s rival Mizuho Financial Group was also in plans to launch its own crypto known as J-Coin.
The banking giant’s more ambitious plans for its MUFG Coin were scaled back following regulatory constraints. Chief among the constraints included Japan’s banking law which was seen as restrictive to the full cryptocurrency ambitions. Operating a money transfer business has proved a much lower hurdle to jump over.
This article was edited by Samburaj Das.