Japan’s FSA Backs Stablecoin Pilot With Mizuho, MUFG and SMBC
FSA Launches Payment Innovation Project
Japan’s Financial Services Agency (FSA) has endorsed a pilot project that will view the country’s largest financial institutions jointly issue yen-backed stablecoins, deepening the government’s push to modernize digital payments. The initiative, unveiled Friday, brings together Mizuho Bank, Mitsubishi UFJ Bank (MUFG), Sumitomo Mitsui Banking Corporation (SMBC), Mitsubishi Corporation, and MUFG’s blockchain arm Progmat.
The FSA said the move falls under its newly launched Payment Innovation Project (PIP), which will coordinate public–private efforts to expand blockchain-based settlement systems. The regulator said the program was established “in response to the use of blockchain technology to enhance payments” and will focus on testing “lawful and appropriate” methods for multi-bank stablecoin issuance.
Under the framework, the consortium’s banks will begin issuing yen-based payment stablecoins this month. The pilot will assess how multiple banking groups can jointly operate and distribute digital tokens categorized as electronic payment instruments under Japanese law. The FSA said it will publish findings and compliance results once the trial concludes.
Investor Takeaway
Corporate Settlement Reform
The pilot follows reports that MUFG, Mizuho, and SMBC plan to overhaul Japan’s corporate settlement infrastructure using blockchain technology to cut costs and speed up transactions. The banks, which together serve more than 300,000 corporate clients, will test whether stablecoins can streamline payments between firms that now rely on legacy clearing systems.
The institutions are building the platform on MUFG’s Progmat network, designed to support digital securities and regulated stablecoin issuance. Progmat is already used by multiple Japanese financial institutions for tokenized deposits and asset-backed instruments, and the new program will extend its scope to settlement-grade digital yen.
Japan’s interest in tokenized money comes amid growing pressure to strengthen local payment infrastructure and counter the rapid progress of stablecoins in the U.S. and Europe. The FSA said it expects the project to “improve user convenience, enhance corporate productivity, and spur innovation in domestic finance.”
Industry Context and Parallel Developments
The announcement comes days later than fintech firm JPYC launched Japan’s first fully licensed yen-backed stablecoin and an associated settlement platform. JPYC President Noriyoshi Okabe said seven companies had already committed to integrating the token, reflecting ahead demand for compliant digital yen products.
Japan’s financial authorities have recently increased activity across the crypto and digital asset sectors. The FSA is reviewing rules that could allow banks to hold BTC and other cryptocurrencies as investment assets, while the Securities and platform Surveillance Commission (SESC) is drafting measures to penalize insider trading in crypto markets.
Meanwhile, global platforms are adapting to Japan’s stricter compliance standards. Bybit, the world’s second-largest crypto platform by trading volume, said it would temporarily suspend new account registrations in Japan as it aligns with the revised guidelines.
Investor Takeaway
From Pilot to Policy
The FSA said the Payment Innovation Project will operate under its FinTech Proof-of-Concept Hub, active since 2017, and that results from the stablecoin experiment will inform future licensing and operational guidance. The pilot, scheduled to run from November 2025, will assess both legal and technical standards for shared stablecoin issuance among major banks.
The agency confirmed that data from the test phase, including compliance frameworks and technical findings, will be published on its website. Officials described the project as part of a broader national effort to ensure Japan’s payment systems remain competitive as blockchain-based finance expands globally.
With government regulators, industrial conglomerates, and the country’s three largest lenders involved, Japan is taking a coordinated approach to stablecoin adoption. The next stage will determine whether these digital yen instruments can transition from pilot use to full-scale integration across Japan’s banking and corporate ecosystems.
