Japan’s leading financial institutions, Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation, and Mizuho Bank, are moving forward with plans to issue a jointly-backed stablecoin backed by the yen. They aim to implement commercial transactions with this digital asset before the close of fiscal year 2026, reflecting a strategic push to expand yen-based digital finance within Japan.
These three megabanks have signed a memorandum of understanding to create a joint voluntary council responsible for designing the operational framework and governance structure of the stablecoin. The council will examine everything from issuance infrastructure to system architecture and potential collaborations with other financial entities that might join the initiative in the future.
The proposed stablecoin will operate under a trust agreement, with the banks acting as co-settlors and a trust bank or similar institution serving as trustee. This legal arrangement aligns with Japan’s Payment Services Act revisions that, since 2022, permit only licensed financial entities to issue yen-denominated digital tokens.
The collaborative project follows a pilot program initiated in November under the supervision of the Financial Services Agency’s Payment Innovation Project. This pilot leveraged fintech infrastructure developed by Progmat, a Tokyo-based company, to explore joint stablecoin issuance and cross-border payment applications.
Japan’s regulatory framework for stablecoins now confines issuance rights to banks, trust companies, and licensed money transfer businesses, ensuring compliance and security for digital yen tokens. In this context, other actors like fintech startups have launched yen-pegged tokens, such as JPYC, which uses yen reserves including deposits and government bonds as backing. Institutional solutions, like SBI Holdings’ partnership with Startale Group for the trust-backed JPYSC stablecoin, target business and cross-border usage.
The megabanks’ formation of the council signals a coordinated effort to standardize and promote yen-backed digital currency adoption, preparing for widespread practical use by the end of March 2027, when the current fiscal year concludes. This initiative also reflects broader political support, as Japan’s ruling Liberal Democratic Party has recently pushed for clearer crypto regulations and the growth of yen-denominated digital assets.