TOKYO—Japan’s biggest lender, Mitsubishi UFJ Financial Group Inc., is stepping into the bitcoin world by investing in Coinbase, a service that allows users to store the virtual currency and make payments with it.
To ramp up operations in Asia, Coinbase is set to raise about $10.5 million from investors on Friday including MUFG’s core banking unit and an MUFG venture-capital fund, bank officials said.
The MUFG investment is a relatively bold step for Japan’s megabanks, which tend to be conservative about new technologies. Some of their automated teller machines don’t accept non-Japanese cards because of security worries.
Recently, MUFG and its peers have been looking at financial technology as an area for growth because low interest rates have hurt the profitability of bread-and-butter lending.
Coinbase, which was founded in 2012 by Brian Armstrong and Fred Ehrsam, has expanded operations to 32 countries currently from 19 in January 2015. The company raised $75 million last year from investors including the New York Stock Exchange and several banks.
Before the latest investment from MUFG and others, Coinbase was valued at about $400 million, people familiar with the situation said.
In Asia, Coinbase currently operates only in Singapore.
“Partnering with leading global financial institutions is a key part of our strategy and we are thrilled to be working with BTMU,” said Mr. Ehrsam, the company’s co-founder and president.
Financial institutions are particularly interested in blockchain, the digital-ledger technology that underpins bitcoin and has other applications in financial transactions. Japanese financial institutions have been sending employees to Silicon Valley to build contacts with financial-technology ventures.
“We don’t have any specific plan for now, but through this investment we wanted to work on developing our skills in public blockchain infrastructure,” said Eiichi Kashiwagi, the general manager of MUFG’s digital innovation division.
Bitcoin is a form of digital currency that allows money to be sent anonymously over the internet without the presence of a traditional third party such as the network of banks that processes money transfers.
Coinbase offers a number of financial services for individuals and businesses, such as processing transactions for merchants that accept bitcoin. Individuals can use Coinbase to keep their bitcoin secure and pay online shopping sites with the currency.
The company says it has 4.1 million users and runs over six million consumer wallets.
In Japan, the image of bitcoin was tarnished when Mt. Gox, a Tokyo-based bitcoin exchange, filed for bankruptcy in 2014 and said it had lost customers’ bitcoin worth hundreds of millions of dollars. Mt. Gox’s chief executive was arrested and charged with manipulating its computer system. He denied the charges.
MUFG senior manager Yuichiro Kawasaki said Coinbase has strong compliance systems to prevent wrongdoing and has received licenses to offer money transmission services in many U.S. states.
Write to Atsuko Fukase at atsuko.fukase[a]wsj.com