Japan’s Top Banks Launch Yen Stablecoin Pilot for 2026

Japan’s financial services regulator has granted approval for the country’s three largest banking institutions—MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank—to conduct proof-of-concept trials of a yen-denominated stablecoin. The PoC trial represents a crucial step in verifying whether regulatory and practical compliance can be executed legally and appropriately when multiple banks jointly issue a stablecoin. According to business newspaper Nikkei Asia, the banks intend to have their stablecoin in practical use by March 2026, following the completion of the pilot program.

The banks plan to utilize the stablecoin for both intracompany and intercompany payments, as well as for their corporate clients. While the initial focus will be on issuing a yen-pegged stablecoin, the institutions also plan to develop a dollar-pegged stablecoin at an unspecified future date. The technical infrastructure for this initiative will be provided by Tokyo-based fintech company Progmat, highlighting the collaboration between traditional banking institutions and innovative financial technology providers.

This banking consortium initiative comes as smaller Japanese firms have already entered the stablecoin market. Tokyo startup JPYC recently announced a fully convertible yen stablecoin backed by domestic bank deposits and Japanese government bonds (JGBs), demonstrating the growing interest in digital currency solutions within Japan’s financial ecosystem. However, Rajiv Sawhney, a Tokyo-based portfolio manager at Wave Digital Assets International, expressed cautious optimism about the banks’ stablecoin adoption prospects.

Sawhney expects the banks will successfully roll out their stablecoin by March 2026 but doubts it will see significant initial adoption. He pointed to the widespread popularity of QR-based payment network PayPay in Japan, noting that unlike the United States, Japan has already largely transitioned to cashless payments. This existing infrastructure presents both a challenge and opportunity for new digital currency entrants seeking to capture market share in Japan’s sophisticated payment landscape.

While USD-pegged stablecoins like Tether’s USDT still dominate approximately 99% of the global market, Japan’s Asian neighbors are making substantial progress in developing their own regulated stablecoin infrastructure. In Singapore, XSGD—a Singapore-dollar-based token operating under full Monetary Authority of Singapore oversight—was listed on Coinbase in late September, marking a significant milestone for regulated digital currencies in the region.

South Korea has also advanced its stablecoin capabilities with the September launch of KRW1, the country’s first fully regulated won-backed stablecoin. This project resulted from a partnership between Woori Bank and digital asset custodian BDACS. Additionally, Tether’s USDT became available for withdrawal through many ATMs in South Korea in July, further integrating digital currencies into traditional financial infrastructure. Meanwhile, China has taken a contrasting approach, with the People’s Bank of China and the Cyberspace Administration of China recently directing Ant Group and JD.com to abandon their stablecoin launch plans in Hong Kong.