A Japanese consortium led by Japan Post Bank (JPPTY) and the Mizuho Financial Group (MFG) has won government support to launch the J Coin, an electronic currency that would be convertible on a one-for-one basis for Japanese yen, according to the Financial Times.

In Macau, meanwhile, the notorious former gangland boss "Broken Tooth" Wan Kuok-koi is backing an "initial coin offering" of a blockchain-backed currency, the South China Morning Post reports. The money would give its backers an investment linked to income generated by casino junket operators.

Officially, the currency is being offered by Dragon Corp. from Macau and the Bangkok-based company Wi Holding, which is a Thai debt collector. The currency offering is looking to raise $500 million, with the offering set for next month in Hong Kong.

Wi Holding CEO Chakrit Ahmad said at a press event that the money will be used to fund the Dragon Pearl Casino Hotel, a 170,000-square-foot floating casino being built in Norway that's due to be sent to Macau in 2019.

Junket operators in Macau work with casinos to bring in "whales" and big fish to gamble in the former Portuguese colony, the only place in China where casino gambling is legal. Junkets extend credit to the gamblers, often working in a shady process where they accept the money in yuan in mainland China and then grant casino chips in Macau.

Those casino chips can then be converted to U.S. dollar-pegged Hong Kong dollars or Macanese patacas (which are worth almost the same as Hong Kong dollars). The process nicely launders cash and gets it out of the grasp of the mainland government, since like Hong Kong Macau is a "special administrative region" of China with its own currency, central bank and laws. 

The new currency would give possessors a digital wallet with "tokens" on it linked to a debit card that would allow them to withdraw cash from an ATM. Investors would own tokens, too, that they could cash out on an exchange operated by Wi Holding and Dragon, as well as public exchanges in places such as Hong Kong and Thailand, Ahmad told CNBC in Hong Kong.

"Broken Tooth" is a notorious gangster and head of the 14K triad faction who spent 14 years in jail for a variety of crimes, including money laundering. He fought for dominance over the junket business with other triad gangs in Macau leading up to its handover back from Portugal to China in 1999. He was finally arrested when a bomb blew up the car of the head of Macau's investigative police, who was jogging at the time and unhurt.

The SCMP says it has verified photos of Wan, 61, at the signing ceremony between Dragon and Wi Holding of the memorandum of understanding to create the currency.

Bitcoin.
Bitcoin.

That would obviously raise more than a few questions at the Securities and Futures Commission, or SFC, in Hong Kong, where the currency is supposed to be offered. Mainland China has already banned offerings of digital currencies, which can be used to skirt the strict money controls imposed by the Communist government.

The Hong Kong Monetary Authority (our central bank) declined to comment on an individual case, while the SFC and the Macau Monetary Authority didn't respond to questions.

Of course, having a triad gangster and a Thai debt collector backing your currency probably ensures you can count on getting your money back from deadbeat gamblers when you need it. In Japan, you'll have to rely on financial institutions that have been struggling since the late 1980s and the government-backed Japan Post Bank to make you whole.

The J Coin backed by Japanese banks is slated to debut well before the 2020 Olympics in Tokyo, so that Japanese banks can show off their technical know-how during the games. It's being set up as Japanese financial institutions react to the introduction of the Alipay service linked to Alibaba (BABA - Get Report) in Japan.

Mitsubishi UFJ Financial Group (MTU) has been working on its own digital currency, too. The group is watching the development of J Coin and evaluating whether or not to take part or continue going its own way.

Mizuho Financial Group president and CEO Yasuhiro Sato notes that it would make more sense for all Japanese banks to participate in the same currency. Around 70% of transactions in Japan still occur in cash, more than double the 30% rate in other developed nations.

The J Coin would have the advantage for merchants over a credit card that it, as now designed, would not charge a fee. The banks, instead of charging a cut, would instead get their benefit from learning more about the users of the currency.

The banks are due to unveil the currency in the next few days, the FT reports. They believe they can benefit the economy to the tune of ¥10 billion ($89 million) by reducing handling and settlement fees for retailers and consumers.

There's a little nationalism at play as well. The banks have complained to the government that Alibaba's Alipay service, which recently launched in Tokyo and several other cities, will gather data on Japanese consumers that Alipay will then send to China. The banks have submitted a presentation to the government and regulators on the matter, which the Financial Times says it has seen.

(This article originally appeared at 9 a.m. ET on Real Money, our premium site for active traders. Click here to get great columns like this from Alex Frew McMillan, Jim Cramer and other writers even earlier in the trading day.)

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At the time of publication, Alex Frew McMillan had no positions in the stocks mentioned.