Japan’s largest financial institutions have announced the shutdown of its blockchain payments system following slow growth and a lack of uptake by target clients. The Mitsubishi UFJ Financial Group (MUFG) has been pushing the system for three years, but it has finally suspended the project it had jointly developed with a U.S. tech firm.
Known as the Global Open Network Japan Inc. (GO-NET Japan), the blockchain payments system was announced in April 2019 but launched two years later in 2021, with MUFG partnering with Akamai Technologies, a Massachusetts-based tech company.
At launch, it was hailed as an open payment network that could process over a million transactions per second, and that would “strive to support diverse payment schemes that take IoT into account, to expand [MUFG’s] payment network business globally and to further enhance [MUFG’s] services.”
However, as the MUFG admitted in its press release, it hasn’t panned out as predicted, with the COVID-19-fueled economic slump greatly affecting the payments market. GO-NET Japan also failed to find its feet in the IoT market, which it projected would be its biggest market opportunity.
“As a result, the business is not expected to be able to achieve profitability in a reasonable timeframe, and it was concluded that it would be desirable to suspend its operations,” the bank, whose total assets are over $3.1 trillion, said.
MUFG has suspended operations of GO-NET and expects to kick off liquidation procedures soon. And while the joint venture may have failed, the bank is determined to continue exploring digital payment solutions through blockchain and beyond as Japan evolves from its widespread cash-first nature.
MUFG has been pro-blockchain for some time now. Through its MUFG Trust, it launched the Progmat blockchain platform through which it supports digital payments through stablecoins issued by various banks. It has also been working on the MUFG Coin, a native digital currency which it announced back in January 2018, taking after America’s largest bank JPMorgan which launched its JPM Coin in 2020.
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