MUFG Coin, SETLcoin, BK Coin, Citicoin, eCM… Who’s Next in the Proprietary Digital Cash Race?

An interesting trend has been noticed among major financial institutions around the world recently. Aiming to cut down transaction costs, just today, MUFG was reported to be experimenting with distributed ledger technology to create its own digital currency – MUFG Coin.

Local newsletter Asahi Digital shared that MUFG started working with its own digital cash last fall and has almost finished building it. MUFG is looking to use MUFG Coin for international remittances via its smartphone app.

As reported by Asahi, most of the Japanese banks, including MUFG, are managing all financial transaction data within the bank through complex and bulky computer systems requiring significant investments. With MUFG Coin and experiments with distributed ledger technology, the bank is looking to build a tamper-resistant transaction record on blockchain. As the necessity to process transactions through complex computer systems will be eliminated, the hope is that it will significantly cut the operational costs and investment.

Sounds familiar, doesn’t it? At the end of last year, banking giant Goldman Sachs filed a patent application with the US Patent & Trademark Office titled Cryptographic Currency For Securities Settlement for a cryptocurrency called SETLcoin. Goldman Sachs’s SETLcoin by will allow P2P transfers with cryptographic tokens representing securities with instant settlement.

As described in the application, the technology provides a virtual multi-asset wallet as a traditional securities and cash account for an individual, investor and/or trader. The wallet has the technology to generate, manipulate and store the SETLcoins for exchanging assets via a peer-to-peer network. The technology facilitates transactions between virtual wallets and non-virtual wallets. Traders will no longer need to visit an exchange to trade securities and the wallet allows securities to be settled within seconds.

Goldman Sachs’ interest in cryptocurrencies has been active for a while now with the most recent $50 million investment in bitcoin startup Circle along with China-based IDG Capital Partners. Goldman Sachs is also getting its fingers into P2P lending to fight emerging marketplace lenders.

Moreover, the quest for Goldman Sachs got heated up with yesterday’s news on Digital Asset, a developer of distributed ledger technology for financial institutions. Paul Walker, Global Co-Head of Technology at Goldman Sachs said, We believe that distributed ledger technology will play a transformative role in the way financial institutions transact globally and we look forward to working with Digital Asset and the broader financial and technical community to engage this emerging technology.

Coincidentally, last year, a philanthropic investment firm backed by eBay Inc. founder Pierre Omidyar, Omidyar Network, announced its investment in eCurrency Mint (eCM), a Dublin-based company that has pioneered a new technology to enable central banks to issue a digital fiat currency called eCurrency.

The difference between eCurrency and various forms of private sector digital value available today is that eCM is issued by a central bank and has the same legal and monetary status as notes and coins. Moreover, eCM is an end-to-end solution that combines hardware, software, and cryptographic security protocols to enable a country’s central bank to not only issue digital fiat currency but also fully manage its operations, including the ability to monitor its movement through payments systems in near-real time.

Once acquired by a country’s central bank, eCurrency can only be minted by the central bank offline. Each unit of eCurrency consists of a cryptocomplex, a self-contained security instrument made up of many layers of security technology, uniquely bound together to ensure that the eCurrency cannot be counterfeited or compromised. eCurrency’s security features can be updated in real time to stay ahead of threats.

Basically, eCM is a way to empower the banking industry in the competition with FinTech startups, paving the way in cost-effective financial transactions involving digital money.

MUFG and Goldman Sachs are not the only ones looking to leverage blockchain and digital cash for various reasons. Citibank has set up three separate systems within Citi that deploy blockchain-based distributed technologies. They developed an equivalent to bitcoin called Citicoin, which is being used internally to understand the digital currency trading system better.

We may see soon news from UBS on their own currency as the bank has a cryptocurrency lab in London and is experimenting in the areas of payments, trading & settlement and smart bonds. It is planning to build an enterprise-wide product called utility settlement coin in partnership with Clearmatics. The bank has also stated that it has 20-25 use cases of blockchain for finance.

BNY Mellon is another major player within the banking industry that has created its own currency called BK Coins as a corporate recognition program which can be redeemed for gifts and other rewards.

It’s also interesting that Goldman Sachs, MUFG, BNY Mellon, UBS and Citi, along with private cryptocurrency development efforts are members of R3CEV blockchain consortium along with a long list of other major banks like JP Morgan, Credit Suisse, Barclays, the Commonwealth Bank of Australia, RBS, BBVA, Commerzbank, National Australia Bank, the Royal Bank of Canada, SEB, Societe Generale, Toronto-Dominion Bank, Bank of America, Deutsche Bank, Morgan Stanley, HSBC, BNP Paribas, the Canadian Imperial Bank of Commerce, ING Bank, Macquarie Bank, Wells Fargo & Co, Mizuho Bank, Nordea Bank and UniCredit.

It is clear that the mist of global banks actively exploring opportunities with proprietary digital cash is growing. However, the story with proprietary cryptocurrency is reminiscent of the story with mobile wallets—when too many ‘Pay’s won’t let anyone win. There are already at least 22 cryptocurrencies with significant market capitalization. Is there a necessity for more?