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MUFG to launch virtual currency service

People walk past a branch of Mitsubishi UFJ Financial Group’s bank of Tokyo-Mitsubishi UFJ in Tokyo on May 16, 2016. (Reuters photo)

TOKYO – Mitsubishi UFJ Financial Group Inc will issue a virtual currency in the fiscal year through March 2018 to provide a money transfer service at lower fees, becoming the first major Japanese banking group to launch such a business, sources close to the matter said Tuesday.

MUFG, Japan’s biggest lender, will first issue “MUFG coins” to employees of its group companies for domestic remittances, eventually extending the service to attract younger tech-savvy customers, the sources said.

The MUFG coins will, for example, enable users to easily split drinking bills using their smartphones and quickly transfer money at lower rates. Users of the virtual currency will be able to open bank accounts called “wallets” on their smartphones.

MUFG and other Japanese banks are trying to catch up with European and US rivals in harnessing “fintech,” the combination of financial services with information technology.

MUFG’s banking unit Bank of Tokyo-Mitsubishi UFJ formed a tie-up last year with Coinbase, the world’s largest bitcoin exchange operator, while Mizuho Financial Group Inc, another Japanese megabank, also started a virtual currency service on a trial basis.

Last May, Japan revised a law to regulate bitcoin and other virtual currencies to prevent their use in crimes such as terrorism and money laundering.

Virtual currencies are defined as having asset values that can be used for settlement. The law requires exchanges that handle virtual currencies to register with financial authorities.

As the revised law is set to take effect in the spring, MUFG is planning to start converting the money at a rate of one MUFG coin to one yen, the sources said.

The banking group may also develop an automated teller machine to enable customers to withdraw MUFG coins with regular currencies.

Article source: http://www.bangkokpost.com/business/world/1173761/mufg-to-launch-virtual-currency-service