Mitsubishi UFJ Financial Group, the world’s fifth biggest bank with total assets of $2.5 trillion, is to embark on the biggest trial yet as early as next year in limited areas within Japan.
The top three megabank in Japan is to test MUFG Coin by allowing 100,000 MUFG Bank account holders to take part.
They will be able to turn their fiat deposits into coins through a phone based wallet app, with one MUFG coin to be worth 1 yen.
Once the Japanese account holders have the coins, they’ll be able to use it as ordinary money for paying in bars and shops that accept it.
To further expedite the adoption process MUFG is considering tie-ups for businesses to promote their acceptance of MUFG coins.
What these deals would be is unclear at this stage, but they could offer discounts on banking fees or even wave them all together temporarily.
Details are sparse however, with one of Japan’s biggest broadcaster, NHK, giving little information on this story save for to add that the bank will oversee transactions to ensure all is working as expected.
That means we do not know at a technical level just how exactly this is set-up, therefore have no clarity on whether this is a real cryptocurrency or just in name.
If it is an actual crypto, then it is unclear how exactly it would be designed with the main question being what blockchain they would use.
It could be a token, which would probably run on ethereum’s blockchain with the token thus pegged to 1 yen and presumably so convertible back to it.
That would make this the biggest real life trial of tokenized fiat, with the bank potentially gaining profits from transaction fees.
But how much control the bank would have over that token is very much an open question as the design could range from yen IoU to pretty much digital cash.
The latter would probably turn heads as we would see for the first time how fiat digital cash, with its own payment system potentially running on top of ethereum, adds or does not add utility and value for end users.