Japan’s Financial Services Agency Supports Pilot for Yen-Backed Stablecoin with Participation from Three Major Banks

The Financial Services Agency of Japan has officially supported a collaborative stablecoin pilot project that includes Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group.

On Friday, the regulator announced that it would extend its support for this initiative, marking it as the inaugural project under the Payment Innovation Project (PIP). PIP is a newly launched program by the regulator aimed at fostering innovation within the payment sector.

The FSA clarified details regarding the stablecoin pilot, noting that the service is anticipated to “enhance user convenience and corporate efficiency in Japan.”

Three Major Banks Create Unified Framework for Stablecoin Issuance

Japan’s three largest banks – Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group – are collaborating on a project to issue yen-backed stablecoins for users in Japan.

Cryptonews reported last month that these financial institutions would facilitate transactions using pegged cryptocurrencies. This initiative seeks to compete with the prevailing dollar-backed USDT and USDC stablecoins.

“The banks will establish a framework for corporate clients to enable the transfer of stablecoins among them according to standardized protocols, initially launching a yen-pegged coin and potentially a dollar-pegged coin in the future,” Nikkei reported.

However, there has yet to be an official joint announcement from the participating banks.

Alongside the three major banks, Mitsubishi Corporation will act as a business entity, while Progmat will supply the issuance infrastructure. Additionally, Mitsubishi UFJ Trust and Banking Corporation is anticipated to manage trust-related functions.

The pilot is expected to commence “from November 2025 for the foreseeable future.” Comprehensive efforts will begin towards practical implementation within this fiscal year.

The FSA stated that the initiative “should be acknowledged as an innovative” endeavor.

Japan Accelerates Stablecoin Launch

Last week, Japanese cryptocurrency exchanges and blockchain companies declared their plans to initiate “self-regulating” stablecoins. This organization, known as the Japan Virtual Currency Exchange Association (JVCEA), has been formalized by the FSA.

In the meantime, Japan introduced its first yen-backed stablecoin last month, named JPYC. This fully convertible yen stablecoin is supported by domestic bank deposits and Japanese government bonds.

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