Japan's FSA Endorses Yen-Backed Stablecoin Initiative with Major Banks

Japan's Financial Services Agency (FSA) has officially supported a collaborative stablecoin pilot project involving three major banks: Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group. This initiative is part of the FSA's Payment Innovation Project (PIP) aimed at enhancing payment system innovation in Japan.

Key Takeaways

The FSA backs a stablecoin pilot initiative involving Japan's three largest banks.
The project aims to improve user convenience and productivity within Japan's financial landscape.
Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group are collaborating to establish a yen-backed stablecoin.
The experiment is set to commence in November 2025, with full implementation targeted for this fiscal year.
The Japan Virtual Currency Exchange Association (JVCEA) is working towards self-regulating stablecoins.

Japan FSA stablecoin

Japan’s Stablecoin Pilot Initiative

Japan’s Financial Services Agency (FSA) has announced its support for a cooperative stablecoin pilot program that involves Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group. This endorsement was made public on Friday and marks the first undertaking of the newly launched Payment Innovation Project (PIP). The PIP aims to foster advancements in Japan's payment systems.

The FSA emphasized the potential benefits of this stablecoin initiative, stating it is expected to enhance user convenience and improve corporate productivity in Japan.

Three Major Banks Collaborate on Yen-Backed Stablecoins

The three leading banks in Japan—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group—are collaborating to develop a framework for issuing yen-backed stablecoins specifically for Japanese users. According to Cryptonews, these banks aim to facilitate transactions using cryptocurrency that is pegged to the yen, thereby diversifying options in the face of dominant dollar-backed stablecoins like USDT and USDC.

As reported by Nikkei, the banks are focused on creating a unified standard for the transfer of stablecoins among corporate clients, with an initial focus on a yen-pegged coin and the possibility of developing a dollar-pegged coin in the future. However, there has yet to be an official statement from the banks involved.

In addition to the three primary banks, Mitsubishi Corporation will participate as a business partner, while Progmat will provide the necessary infrastructure for coin issuance. Mitsubishi UFJ Trust and Banking Corporation is also expected to manage trust-related functions.

The pilot program is set to begin in November 2025 and will continue into the foreseeable future, with comprehensive implementation anticipated within this fiscal year. The FSA has expressed that this initiative must be seen as a pioneering effort in financial innovation.

Japan Accelerates Stablecoin Development

In related news, Japanese cryptocurrency exchanges and blockchain firms have recently announced plans to begin self-regulation of stablecoins. This regulatory body, known as the Japan Virtual Currency Exchange Association (JVCEA), has been officially recognized by the FSA.

Moreover, Japan made headlines last month with the launch of its inaugural yen-backed stablecoin, JPYC. This fully convertible stablecoin is anchored by domestic bank deposits and Japanese government bonds, emphasizing the country’s commitment to advancing its stablecoin capabilities.