Capital markets News

Japan’s biggest bank MUFG embraces crypto


Today Japan’s largest bank MUFG announced a partnership with startup Ginco, which will provide an enterprise wallet solution for MUFG’s crypto asset trust services. The Japanese bank revealed that it had worked on crypto services for many years, but halted because the government imposed a ban on bank crypto activities. That changed last year.

MUFG is known for a different blockchain activity as the founder of Progmat, the security token platform that has expanded into stablecoins and utility tokens. 

Japan’s ban on bank involvement in crypto happened after the country’s second massive crypto loss. In 2018, hackers stole more than half a billion dollars of coins from crypto exchange CoinCheck. Four years earlier, Japan was host to the Mount Gox crypto exchange collapse in which thieves stole 850,000 Bitcoin valued at $473 million at the time (or $22.4 billion today).

However, in the last couple of years institutional custody has taken off in other jurisdictions and Japan doesn’t want to be left behind. Hence, October 2022 saw the enactment of legislation permitting trust banks to provide crypto custody services.

MUFG believes there are benefits in setting up trusts to hold the crypto assets. Until recently, a company issuing tokens that held them at the end of the period was assessed for taxes on unrealized profits. However, the law changed recently, and that is no longer the case.

If we understand it correctly, MUFG sees advantages in setting up crypto trusts for institutional investors, some of whom (limited liability partnerships) would not be allowed to invest in crypto directly. But presumably they can via a trust, where the tokens vest over time. 

MUFG crypto study group

For Progmat, MUFG ran an industry study group for security tokens and is doing something similar for crypto. Nine companies will join the group, including Ginco, SBI subsidiary Shinsei Corporate Investment, and Financie, the sports fan token firm, which is similar to Europe’s Chilliz/Socios. Because Financie helps with the issuance of many tokens, it has an Initial Exchange Offering (IEO) support business for issuers. With MUFG it will explore the potential co-design of token allocations and vesting for institutional investors as part of crypto trusts.

In other recent MUFG news, it invested in blockchain interoperability startup DataChain, which mainly focuses on public blockchains. On the security token side, it unveiled a collaboration with Progmat and NTT Data, a major player in Japanese bond market infrastructure.

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