Market News

Japan Advances into Stablecoin Territory with Major Banks Set to Launch by 2026

Japan's financial services regulator has approved a stablecoin pilot involving the nation's three largest banks: MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank.

The Proof of Concept (PoC) trial aims to ensure that "regulatory and practical compliance" is achieved when multiple banks jointly issue a stablecoin.

Plans are in place for practical use of the stablecoin by March 2026, with a focus on facilitating both intracompany and intercompany payments for corporate clients.

The banks will initially issue a yen-pegged stablecoin, with intentions to develop a dollar-pegged stablecoin at a later date.

Tokyo-based fintech company Progmat will provide the technical infrastructure needed for this initiative.

Interestingly, smaller firms in Japan have already started offering yen stablecoins, such as JPYC, which is fully convertible and backed by bank deposits and Japanese government bonds.

Despite these advancements, expert Rajiv Sawhney believes initial adoption may be slow, citing Japan's already cashless environment and the dominance of QR-based payment networks like PayPay.

Currently, USD-pegged stablecoins dominate the market, controlling 99% of the share, while other Asian nations rapidly develop their stablecoin frameworks.

Countries such as Singapore and South Korea have made significant strides, launching fully regulated stablecoins and adding new usage options within their financial systems.

In contrast, recent actions from China reflect a tightening grip on private sector stablecoin initiatives, marking a notable divergence in regulatory approaches across the region.