Japan’s three largest banking institutions have received regulatory clearance to begin a joint stablecoin trial, marking one of the country’s most significant steps toward integrating tokenized settlement within the formal financial system. The Financial Services Agency has approved a pilot involving Sumitomo Mitsui Banking Corporation, MUFG, and Mizuho Bank, a group that collectively oversees more than six trillion dollars in assets. Their initiative, known as the Payment Innovation Project, aims to determine whether a yen denominated stablecoin issued by multiple institutions can align with banking and payment rules while operating on distributed ledger infrastructure developed by Progmat. The project’s approval signals that Japan’s regulators are willing to support digital settlement models that remain tightly integrated with the country’s compliance frameworks. Early statements from the FSA indicated that the trial represents an effort to promote innovation while ensuring that stablecoins issued by major institutions satisfy the supervisory expectations applied to traditional payment systems.
The banks plan to use the stablecoin for internal and external settlements, with Mitsubishi Corporation expected to participate early as the token allows the trading conglomerate to streamline settlement across its broad network of subsidiaries. Internal testing is expected to assess whether the token can function consistently under regulatory constraints, especially in areas involving settlement finality, custodial responsibilities, and capital treatment. The pilot also reflects broader competitive pressure within Japan’s digital asset ecosystem, where both domestic and international issuers are accelerating development to gain an early foothold in regulated stablecoin markets. The trial is positioned to evaluate scalability while offering insight into how a large institution backed token fits within the country’s existing payments landscape. Initial results will be published by the regulator, highlighting issues tied to compliance and cross company interoperability as authorities continue to refine supervisory expectations for stablecoin activity across licensed financial institutions.
The yen based stablecoin would be Japan’s second major entry into the sector following the recent launch of JPYC, a token designed to offer a local alternative to dollar dominated stablecoins. Market analysts have noted that the dollar currently accounts for ninety nine percent of global stablecoin circulation, intensifying concerns among policymakers about long term monetary dependence on a foreign currency in digital settlement environments. Executives at JPYC have suggested that stablecoin issuers may become increasingly important buyers of Japanese government bonds as the Bank of Japan continues to taper its bond purchasing activities. Such a shift would further integrate institutional stablecoin operations into national financial markets, positioning regulated issuers as potential sources of domestic liquidity. The Payment Innovation Project may also contribute to wider international discussions on how to manage multi currency stablecoin systems, with dollar functionality scheduled for integration in late 2026. In parallel, other regions are advancing their own government aligned stablecoin initiatives, including Saudi Arabia, which is developing a tokenized payment system supported by its Capital Markets Authority and central bank. These global movements underscore how tokenization is gradually entering mainstream financial architecture under regulatory guidance intended to balance innovation with stability.
