Japan’s FSA said it will support a stablecoin project backed by three banking arms of the country’s major financial groups. Finance Minister Satsuki Katayama stated on November 7 that there is momentum to support digital payments in a country where credit cards and cash remain popular. 

FSA’s Katayama disclosed after a regular cabinet meeting that the banking arms of Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMFG), and Mizuho Financial Group (MFG) will jointly issue stablecoins. He pointed out that the stablecoins will be tested for cross-border payments after the FSA’s assessment and approval. The agency wants to confirm whether the service can be carried out legally and in an appropriate manner.  

The three megabanks, which reportedly have over 300,000 major business partners, unveiled their stablecoin ambition almost three weeks ago. They emphasized that the collaboration will help popularize stablecoins in Japan and create a common standard for cross-border payments and corporate clients. The Mitsubishi Corporation will pilot the first application.  

Megabanks prepare for yen-pegged stablecoin launch

The three major banks have announced that they will soon launch a Japanese yen-backed stablecoin. The megabanks also disclosed that the stablecoin will maintain a 1:1 value redemption ratio. Meanwhile, they are considering a U.S. dollar-backed stablecoin to help streamline international transactions. Japan recently revised its Payment Services Act, allowing licensed banks and trust companies to issue stablecoins fully backed by fiat currency. 

MUFG is expected to utilize its Progmat platform as the foundational building block for the issuance and management of the proposed stablecoin. Progmat was developed to support tokenized securities, but has since been enhanced to include stablecoin issuance features that align with Japan’s tight compliance standards. 

“Each country makes its own financial system resilient for its own sake…it is also in every country’s interest for other financial systems to remain resilient.” 

–Himino Ryozo, Deputy Governor of the Bank of Japan

The MUFG reportedly expects early adoption to focus on corporate clients, particularly exporters. Multinational supply chains and financial institutions with regular high-value transfers were also identified as early adopters.

If successful, the technology could be expanded to wholesale lending markets and trade finance. The proposed stablecoin will function either as a complementary or parallel service, depending on the direction Japan’s future policy takes.

Startup JPYC launches first-ever yen-backed stablecoin

Startup JPYC launched the world’s first yen-pegged stablecoin last week, and it has backed it with domestic savings and Japanese government bonds. JPYC’s CEO, Noritaka Okabe, said his company aims to spur innovation by providing startups with access to low settlement and transaction fees. However, former Bank of Japan (BOJ) executive Tomoyuki Shimoda believes yen stablecoins will not enjoy the same momentum as those pegged to the U.S. dollar. 

Meanwhile, Japan’s market is reportedly attracting new stablecoin entrants as rules are clarified. SBI and Ripple are targeting the roll-out of RLUSD in Japan in early 2026. Japan Post Bank also announced plans to roll out a tokenized yen deposit, DCJPY, by fiscal 2026. The BOJ previously called for the adoption of stablecoins, emphasizing that these tokens can improve the cost and speed of payments.

The BOJ also stated that stablecoins can reshape payments because they can transfer value at any time, almost instantly, and at a lower cost. However, the BOJ’s Deputy Governor Ryozo previously argued that global rules should welcome safe versions of these stablecoins and ensure risks are mitigated appropriately.

He further cautioned that rules must keep pace with changes, adding that supervision must adapt as more non-bank players enter the financial space. 

Ryozo also emphasized that stablecoins may emerge as crucial in the global payments landscape, partially replacing the role of bank deposits. He added that regulators are doing a lot in these spheres, especially considering that political momentum has an expiry date. 

The deputy BOJ governor further believes that national authorities should show why implementing regulatory standards is in the best interest of the country. He said shortcutting domestic persuasion by justification based solely on commitments from the international community will not work.

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