Japan’s three largest banks have canceled a joint venture on a blockchain-based peer-to-peer money transfer service, saying it was a duplication of their own individual projects.  

The so-called megabanks, comprising Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial Group, said they therefore saw no reason to pursue the joint effort.

The Japanese Bankers Association, chaired by Mizuho Bank CEO Koji Fujiwara, disclosed the cancellation in materials presented at the end of January to a Financial Services Agency public-private council on improving the sophistication of Japan’s payment environment.

The initiative would have made it possible for customers to transfer and receive funds through virtual accounts linked to bank accounts, using email addresses or mobile phone numbers.

The project was announced in 2017 in cooperation with IT company Fujitsu, which had been responsible for the development of the blockchain solutions.

As well as developing a cloud-based platform, Fujitsu was working on a smartphone application for peer-to-peer money transfers, with the aim being to have two solutions linked to accounts at each of the three banks.

Trials for the joint project were carried out in 2017, with plans for more thorough testing due to take place the following year.

Stablecoins being developed by Mizuho & MUFG to cut transaction costs

The development of digital assets was among the efforts being undertaken by the megabanks that would have been in competition with the joint project. J-Coin and MUFG Coin are cryptocurrencies being developed by Mizuho Financial Group and Mitsubishi UFJ Financial Group, respectively.

The initial trial for J-Coin by Mizuho Financial Group, established in 2003 and headquartered in the Ōtemachi district of Tokyo, was conducted in partnership with IBM Japan in late 2016, with the aim of cutting the costs of financial transfers.  The J-Coin’s value is pegged on a 1-to-1 basis to the Japanese yen and essentially serves as a centralized stablecoin intended to minimize the effects of price volatility.

Earlier in 2016, Mitsubishi, founded in 1880 and also headquartered in Tokyo, announced its MUFG Coin. As with the J-Coin, the MUFG Coin would serve as a stablecoin pegged to the yen, with the aim of reducing transaction costs.

Japanese banking giants also members of R3 consortium

Mitsubishi UFJ Financial Group President, Nobuyuki Hirano, had indicated that MUFG Coin would seek to mitigate volatility, among other issues often associated with cryptocurrencies, saying Mitsubishi UFJ Financial Group plans to overcome issues of existing virtual currencies and “create a highly useful currency.”

In addition to developing digital assets, the megabanks have signed on to other global blockchain ventures, with Mizuho Bank and Mitsubishi UFJ Financial Group being among the institutions joining the R3 consortium, which boasts a membership of over 200 of the world’s largest financial institutions involved in the research and development of distributed ledger technology within the financial system and other areas of commerce.

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