What To Know:
- Japan’s Financial Services Agency (FSA) has announced support for a pilot project under its new Payment Innovation Project (PIP).
- In the project, MUFG, SMBC, and Mizuho Bank will jointly issue a yen-backed stablecoin starting November 2025.
- The pilot aims to test legal and regulatory compliance for multi-bank stablecoin issuance, with Mitsubishi Corporation as the first corporate user and Progmat providing the digital asset infrastructure.
Japan’s Financial Services Agency (FSA) has officially announced its support for a pilot project. The project will see the country’s three largest banks, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank, jointly issue a yen-backed stablecoin. The project marks the first project under the newly established Payment Innovation Project (PIP), which is aimed at advancing secure and compliant digital payment systems. The pilot is expected to begin in November 2025.
Japan’s FSA Backs Stablecoin Pilot
As per an official statement, the FSA is scheduled to hold a meeting on ‘Working Group on Crypto Assets System’ on November 7, 2025, and more information might be available soon.
The FSA’s endorsement confirms months of speculation after reports in mid-October that Japan’s biggest financial institutions were preparing to consider issuing stablecoin. Until now, the banks had refrained from making any public statement.
According to the FSA, the pilot will “verify whether regulatory and practical compliance can be ensured when multiple banking groups jointly issue stablecoins.”The agency thus, will assess whether existing laws can accommodate a coordinated stablecoin framework without undermining financial stability or consumer protection.
The project will involve several key participants beyond the three megabanks. Mitsubishi Corporation will serve as a business partner and the first corporate user of the stablecoin. Progmat, a digital asset platform operated by MUFG, will provide the underlying issuance infrastructure, while Mitsubishi UFJ Trust and Banking Corporation will oversee the trust functions that back each digital coin.
Under the pilot, a yen-pegged stablecoin will be launched first, followed later by a dollar-pegged version. Both stablecoins will stick to standardized industry rules that assures interoperability across payment networks. This will allow companies to transfer funds easily between different banks and platforms, which in turn, makes digital payments more efficient for Japan’s large corporate industry.
Mitsubishi Corporation intends to use the stablecoin for internal settlements across its vast trading network. The firm will test how blockchain-based transactions can reduce costs and processing times. With the three banks serving more than 300,000 major corporate clients combined, the estimated scale of adoption could be significant.
For Japan, the timing of this project is strategic. The government has doubled down on modernization of the financial system while keeping an oversight on crypto-related activities. Regulators are testing stablecoins under the supervision of established banks to create a model that has both innovation and accountability.
Market observers say the experiment could be a benchmark for other economies seeking to incorporate blockchain into regulated financial systems. Japan’s system, which would favor an issue open only to licensed financial institutions over the broader issuance on some platforms, may also increase confidence in markets by having each digital token be fully backed and auditable. The FSA has repeatedly stated in no uncertain terms that innovation should commence within a system adhering to AML regulations and consumer protections.
In backing this pilot, the agency wants to demonstrate that digital systems of payment can peacefully coexist alongside Japan’s traditional banking structure without sacrificing oversight. Other areas are heading in the same direction. In Europe, French investment bank ODDO BHF recently launched EUROD, a euro-backed stablecoin designed to comply with the EU’s Markets in Crypto-Assets (MiCA) regulation. Meanwhile, several major banks, including Deutsche Bank, UBS, and Goldman Sachs, are exploring their own collaborative stablecoin initiatives.
Also Read: Japan’s Megabanks to Launch Yen & Dollar-Backed Stablecoins
