Japan’s Big 3 Banks Receive Green Light for Joint Stablecoin Trial

ntroduction

Japan’s top three banks—Sumitomo Mitsui Banking Corp., MUFG, and Mizuho Bank—have secured regulatory approval to trial a joint stablecoin initiative. This comes just a month after the debut of the country's first stablecoin pegged to the yen, marking a significant step toward integrating blockchain infrastructure into mainstream finance.

Regulatory Approval and Project Details

The Japanese Financial Services Agency (FSA) has given its go-ahead for the Payment Innovation Project (PIP), which allows the three leading banks—collectively holding $6.8 trillion in assets—to launch and test a joint stablecoin. This collaborative effort aims to demonstrate how multiple banking institutions can issue a compliant stablecoin in line with Japan’s stringent rules on payment and banking operations.

The trial will deploy the stablecoin on a distributed ledger (DLT) platform developed by Progmat, a firm founded by MUFG in cooperation with NTT Data and several regional banks. The FSA has emphasized that publishing the results of the trial is part of its ongoing commitment to fostering payments innovation while maintaining robust regulatory oversight.

Scope and Use Cases

The project will test the stablecoin’s utility for both inter-company and intra-company settlements, with Mitsubishi Corp.—Japan’s largest trading company—as an early adopter. Mitsubishi plans to use the stablecoin for internal settlements across its 200+ subsidiaries, as well as for international remittances. The stablecoin is designed to streamline transactions, cutting both time and costs, with the first deployment set for March next year.

Dollar integration is scheduled for late 2026, indicating ambitions to expand beyond yen-only settlement and provide alternatives in a market long dominated by USD-pegged tokens.

Broader Stablecoin Landscape

This new token follows the recent introduction of JPYC, Japan’s first yen-pegged stablecoin. With the greenback currently dominating 99% of the stablecoin market, Japanese authorities are eager to build local capacity in digital currency and reduce dependency on foreign tokens. Noritaka Okabe, CEO of JPYC Inc., predicts that domestic stablecoin issuers may soon become key buyers of Japanese government bonds (JGBs), especially as the Bank of Japan reduces its bond purchases.

International Developments

The trend extends beyond Japan: Saudi Arabia is making similar moves with its own government-led stablecoin, designed to support the nation’s shift to a cashless economy. The country’s Capital Markets Authority and central bank are involved in the project, which seeks to enhance payment speed, reduce cross-border costs, and improve transaction traceability.

Saudi Arabia already sees digital payments account for 80% of all transactions, and stablecoins are expected to reinforce financial modernization and consumer protection in the coming years.

Key Takeaways

Japan’s three largest banks are collaborating on a yen-pegged stablecoin trial, with regulatory approval from the FSA.

The Payment Innovation Project (PIP) will focus on compliance, efficiency, and new settlement use cases for businesses and international remittances.

Yen and U.S. dollar integrations are planned, challenging the dominance of USD stablecoins in the market.

Domestic stablecoin issuers could become significant players in government bond markets.

Similar stablecoin innovation efforts are underway in Saudi Arabia, reflecting a global shift toward regulated digital currencies and cashless payments.

Author: Brian Leclere