A MUFG Bank signboard in Tokyo, Japan April 3, 2018. Photo: Reuters / Toru Hanai
Japan’s MUFG Bank and Sumitomo Mitsui Banking Corp, along with 14 other global banks, have reportedly invested $63 million to establish Fnality. Photo: Reuters

Japanese financial giant Mitsubishi UFJ Financial Group (MUFG) says it will, by 2020, roll out an ultra-fastblockchain-based payment network capable of 10 million transactions per second.

The news, that MUFG says will pave the way for everyday-use blockchain-based payment systems, comes as its banking arm, Bank of Tokyo-Mitsubishi, is reportedly preparing to launch its own cryptocurrency before the end of next year.

The prototype blockchain payment platform, co-developed by MUFG and US tech company Akamai, can currently handle one million transactions per second. In contrast, Bitcoin, the world’s first application of blockchain, can process less than 10 transactions per second. The 10 million transactions per second rate would come as its technology improves, MUFG says.

“For years, the financial industry has sought to utilize blockchain to secure and hasten transaction processing, and lower associated costs,” Nobuyuki Hirano, president and group CEO of MUFG, said via a company statement. The new platform would also help the group to deliver “significantly greater volumes of high-speed payment transactions without compromising the level of security required to combat fraudulent transactions,” he said.

Andy Champagne, a chief technology officer at Akamai, said the platform would allow for multiple cents-not-dollars “micropayment-type transactions” or “Internet of Things”-style payments.

MUFG has been an enthusiastic supporter of blockchain and crypto-currencies and invested in Coinbase, now the biggest US crypto-currency exchange, in 2016. It has been a core member of the financial industry blockchain consortium R3 since 2015, and last week, Japanese broadcaster NHK reported that MUFG’s banking arm, Bank of Tokyo-Mitsubishi, will next year launch a working crypto-currency pilot.

NHK says the pilot program will allow more than 100,000 account holders to install a smartphone app to convert Yen currency deposits, pegged at a 1-to-1 rate, into a crypto token called the MUFG, which can be used at participating restaurants and retailers or online.

Japan has been a world leader in both crypto-currency adoption and regulation but the Bank of Tokyo-Mitsubishi move will be the first time a Japanese bank has issued its own crypto-currency.

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