Japanese Banking Giant Creates Bitcoin Safety Net

Mitsubishi UFJ Trust and Banking will use exchange transaction records to safeguard customer bitcoins.

Mitsubishi UFJ Trust and Banking, the trust banking arm of Mitsubishi UFJ Financial Group (MUFG), is designing an optional safety net whereby customers will be able to keep their cryptocurrency separate from their other assets, according to Nikkei Asian Review.

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The firm is looking to launch the new system by April of next year. It will be the first institution to offer this option, and it is applying for a patent.

Keeping things separate

The system will work by keeping the same record of transactions that cryptocurrency exchanges do. If something seems amiss – for example, a suspiciously large transaction, or evidence of a hack – MUFJ will be able to stop the transaction in order to inspect it.

Exchanges will need to pay a fee to join the system. The incentive to do so will be to attract customers by providing them with peace of mind. Safety of funds has always been an issue with cryptocurrency exchanges, and it is going to become an increasingly loud issue as the number of exchange users grows.

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MUFG is Japan’s largest financial group and the world’s second largest bank holding company. It is also the second largest public company in Japan. As with many in its homeland, it is an eager investor in blockchain technology.

MUFG invested in Coinbase, the biggest cryptocurrency exchange in the US, and subsidiary Bank of Tokyo Mitsubishi UFJ signed a partnership with it. In 2016, MUFG revealed a new project – rewarding its employees with a token called OOIRI as payment for maintaining good health, according to Kabu.com. The OORI token is tied to the value of the yen.

Back in May, the company invested in R3, a blockchain technology development project, and the Enterprise Ethereum Alliance.

So the company recognises the benefits of the technology behind cryptocurrency, but at the same time is wary of the stampeding prices.

In a recent interview with CNBC, MUFG CEO Noboyuki Hirano stressed the difference between public digital currencies like Bitcoin and blockchain technology as used by banks: “It’s a kind of interbank money or securities settlement clearing method. So it has nothing to do with Bitcoin or other type … which does not have any controlling arm, which has a huge volatility every day…”

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