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Business

Japan's BTMU to develop money transfer service with bitcoin exchange

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Financial institutions see great promise in blockchain technology.   © Reuters

TOKYO -- Bank of Tokyo-Mitsubishi UFJ will form a capital tie-up with U.S. bitcoin exchange operator Coinbase, looking to jointly develop a secure, low-cost system to transfer funds using blockchain technology.

The banking unit of Mitsubishi UFJ Financial Group will invest several hundred million yen (100 million yen equals $993,200) in Coinbase, becoming the first Japanese bank to hold a stake in a digital currency exchange. Other investors in the San Francisco-based startup include the New York Stock Exchange and Banco Bilbao Vizcaya Argentaria of Spain.

Coinbase has roughly 4 million customers, operating mainly in the U.S. and Europe. Partnering with BTMU, Japan's largest bank with 40 million accounts in its home market, will allow the major bitcoin exchange operator to pursue its ambition of expanding into Asia.

The tie-up likely will let Japanese people convert bitcoins into cash through their BTMU bank accounts. Low-cost fund transfers are one service that is likely to emerge from the deal. Wiring money internationally currently costs several thousand yen per transaction, but blockchain-based money transfers are expected to be a lot cheaper.

Blockchain technology allows for tamper-proof record keeping, including for transactions, at low cost. This has spawned a range of blockchain-based projects such as recording property registration, personal identification and other data. BTMU is exploring new business opprotunities, as the technology is expected to play a crucial role in "internet of things" networks.

The market value of digital currencies totaled $7.37 billion at the end of 2015, of which bitcoin accounted for 90% by some estimates. A banking law revision in Japan that requires businesses handling virtual currency exchange to register with authorities was enacted in May and is expected to take effect within a year. BTMU will monitor regulatory changes as it explores new services.

(Nikkei)

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