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Japan to launch a centralized Crypto

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Mitsubishi UFJ Financial Group (MUFG) is launching an initiative to open a new exchange and issue its own virtual currency: the “MUFG coin.”

MUFG plan to suppress fluctuations in the price of MUFG coins by controlling the trades themselves so that they can be used stably for settlement and remittance. This step by MUFG, is going to make the above said digital currency centralized and it could easily be controlled by a bank. In addition, the bank can also control the value of the coin, which is aiming to be worth approximately 1 yen. This coin will be users friendly easily accessed by their smartphones and will be used as a mode of payment for services and products in a secure way.

They (MUFG) are aiming to increase adoption with suppliers and retailers throughout Japan for the payment platform and are aiming to launch it later this year. The move shows how digital currencies and blockchain tech are slowly being realized by financial institutions, who are keen to benefit from the cheap operational costs that virtual currencies can offer.

Legislative Hurdles and Financial Regulation

MUFG has already informed the Financial Services Agency on their plans to issue coins and open an exchange. The coins will be issued with the collaboration of Bank of Tokyo-Mitsubishi UFJ, with plans to organize competitions to generate ideas for business usage of the MUFG coins in March.

For establishing a virtual currency exchange in Japan, MUFG will have to register with the Financial Services Agency, and there are still some hurdles left. With the continuous growth of Fintech industry, further rules and regulations for responding to new services like MUFG will continue to be advanced in the country.

Online Responses To The MUFG coin Announcement

Users took to Twitter  to voice their opinions on the upcoming coin launch. They were quick to point out that the MUFG coin is not OMG and that the price is to be capped at 1 yen per coin.

The Mitsubishi UFJ Financial Group, headquartered in Chiyoda, Tokyo, is Japan’s largest financial group and is the 2nd largest bank holding company in the world, holding around $1.8 trillion USD.

Will we see increasing crypto currency initiatives such as this, with centralized banking controls? Do they offer the same degree of security as other decentralized cryptocurrencies? Let us know what you think in the comments below.

 

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Australian Taxation Office warned against crypto retirement funds

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Regulatory authorities around the world have tighten the grip on crypto projects. Taxation authorities like Internal Revenue Service (IRS) and Australian Taxation Office (ATO) are the latest to join the list with strong initiatives.

Australian Taxation Office recently sent warning letters to the investors who have invested a large part of their retirement savings in crypto related funds. ATO sent these letters in order to warn investors against high risk investments like crypto. One of the key responsibilities of regulatory authorities and taxation authorities is to keep investors away from high risk investment schemes.

A spokesman from ATO told local media that “We have already seen instances in 2018 where investors lost significant amount of their retirement fund in crypto investments, so it’s our duty to make them aware about the kind of risk crypto market posses”. The spokesman further explained that they are also against the huge exposure in any single asset class. “We are not saying that we are all and all against the crypto market or crypto assets, but we are more concerned about the kind of exposure these crypto retirement funds have in single crypto asset like Bitcoin”

“If an investor is putting more than 90% of his retirement savings in crypto then obviously it is at high risk and that’s what we discourage, we have no issues in diversified portfolios but if crypto retirement funds are having 100% exposure in crypto assets then we have to warn investors about the potential losses.

Self-Managed-Super Funds (SMSFs)

SMSFs are type of retirement accounts privately managed by individuals rather than the institutions or regulated financial companies. Australian Securities and Investments Commission also supports ATO’s decision, in a recent statement ASIC said

“Be wary of services offering to establish an SMSF for you in order to gain exposure to cryptocurrencies. Not only does operating an SMSF involve significant time, skills and responsibility, you may also be putting your retirement savings at risk”

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Morning Crypto Roundup: Coinbase, Bakkt, Binance in news

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“Coinbase seeing $200-400 million in new crypto deposits every week”: Armstrong 

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CEO of Coinbase, Brian Armstrong says that “Adoption of crypto by Institutions is no more an uncertainty. The question was valid about 12 months ago, but now everything has changed as we’re seeing $200-400 million a week in new crypto deposits from institutional clients”

In a recent tweet, Armstrong further says that trust and safety means a lot to crypto investors and Coinbase is on a mission to provide safe infrastructure to institutional clients in order to increase adoption.

Coinbase has completed acquisition of Xapo which helped them in institutional business. In a recent blogpost, Coinbase further mentioned that in just one year of launch, Coinbase custody has reached a staggering number of $7 billion of assets under custody, stored on behalf of 120 clients from 14 different countries.

The highlight of today’s tweet from Brian Armstrong was the numbers from Institutional investors. Safety have always been a big issue for investors and that’s why there were lot of discussions regarding adoption of crypto at Institutional level, but with $200 – 400 million coming into Coinbase every week, we can easily say that crypto adoption at institutional level is no more a question, it’s a reality.

The way forward 

We already discussed about the importance of safety of funds in crypto market, but in order to increase adoption, crypto market must create new traders. Traders love leverage, borrowing and lending which allows them to trade the market even with limited resources. Retail forex market is a prime example of such facilities. Coinbase did mentioned in the blogpost that they are excited to explore new ways to monetize and leverage crypto assets like borrowing and lending.

Bitcoin ETF

Decision about the Bitcoin ETF by securities and exchange commission is pending in October. Exchange traded fund approval from SEC can open new doors for crypto adoption at an institutional level.

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