Japan's largest bank to invest $10.5 million in Bitcoin company Coinbase

According to the Wall Street Journal, Japan’s largest banking institution, Mitsubishi UFJ Financial Group (MUFG), is entering the world of Bitcoin by investing in Coinbase.

Coinbase is preparing to raise $10.5 million on Friday from investors including Mitsubishi UFJ Financial Group’s core banking unit and a MUFG venture capital fund as it looks to expand its presence in Asia, bank officials said.

The investment is also a bold step for Japan's megabanks, which have previously been conservative about new technology. For example, some of their ATMs do not accept non-Japanese bank cards.

More recently, MUFG and its peers have been looking to financial technology as an area for growth as low interest rates have hurt profitability in banks’ main lending business.

Coinbase, a digital currency company co-founded by Brian Armstrong and Fred Ehrsam in 2012, has expanded its business to 32 countries, but only covers Singapore in Asia. Last year, the company received $75 million in Series C funding from investors including the New York Stock Exchange and several banks.

According to people familiar with the matter, Coinbase's valuation during its Series C round of financing was approximately $400 million.

“Partnering with leading global financial institutions is a key part of our strategy, and we are excited to be working with Bank of Tokyo-Mitsubishi UFJ,” said Mr. Ehrsam, co-founder and president of Coinbase.

Eiichi Kashiwagi, general manager of MUFG Group’s digital innovation division, said: “We don’t have any specific plans at the moment, but through this investment, we want to get involved in the development of public blockchain infrastructure.”

Bitcoin is a digital currency that allows users to conduct transactions freely without the involvement of a third party, such as a banking network, to process remittances.

Coinbase provides a variety of financial services to individuals and businesses, such as processing Bitcoin transactions for merchants, and individuals can use Coinbase to store their Bitcoins.

The company said it now has 4.1 million customers and the number of its consumer wallets has exceeded 6 million.

In Japan, bitcoin's image has been tarnished by the collapse of Japanese exchange Mt. Gox, whose chief executive was arrested on suspicion of manipulating the exchange's systems, although he has denied the charges.

In response, Yuichiro Kawasaki, senior manager of Mitsubishi UFJ Financial Group, said that Coinbase has a strong compliance system that can prevent illegal activities, and it has obtained licenses in multiple states in the United States to provide money transfer services.