Japan’s Banking Giants Unite for Government-Backed Stablecoin Project

TLDR

• Japan’s Financial Services Agency officially supports a stablecoin pilot project by three major banks: Mizuho Bank, MUFG, and SMBC
• The project will test joint issuance of stablecoins classified as “electronic payment instruments” under Japanese law for cross-border payments
• The pilot launches in November 2025 under the FSA’s new Payment Innovation Project (PIP) initiative
• Finance Minister Satsuki Katayama confirmed the project aims to assess legal compliance and operational practices
• Results and compliance insights will be published on the FSA’s website after the experiment concludes

Japan’s Financial Services Agency announced Friday it will support a stablecoin pilot project involving the country’s three largest banks. The FSA confirmed that Mizuho Bank, MUFG, and SMBC will work together to jointly issue stablecoins for payment purposes.

The consortium includes additional partners beyond the three megabanks. Mitsubishi Corporation, Progmat Inc., and Mitsubishi UFJ Trust and Banking Corporation will also participate in the project. The collaboration represents a coordinated effort among Japan’s major financial institutions to advance digital payment technology.

Finance Minister Satsuki Katayama addressed the project during a news briefing Friday following a cabinet meeting. Katayama, who oversees the FSA, confirmed the regulator will assess whether the service can be carried out legally and appropriately. The announcement comes as Japan continues efforts to modernize its payment systems in a country where cash and credit cards remain widely used.

The stablecoins will be classified as “electronic payment instruments” under Japanese law. The banks plan to test the digital assets for cross-border payment applications. MUFG released a statement Friday outlining these testing plans.

Testing Regulatory Compliance

The project will examine how multiple banking groups can jointly issue stablecoins while maintaining regulatory compliance. The FSA stated the experiment aims to verify whether such a system can be executed lawfully according to existing financial regulations. The agency will monitor operational practices throughout the pilot program.

The pilot is scheduled to run from November 2025 onward for an indefinite period. The FSA said it will publish results from the experiment on its website. These results will include legal and compliance insights gathered during the testing phase.

New Payment Innovation Initiative

This project marks the first under the FSA’s newly established Payment Innovation Project. The FSA launched PIP on Friday specifically to accelerate blockchain-based payment innovations. PIP operates within the agency’s existing FinTech Proof-of-Concept Hub, which has supported fintech experiments since 2017.

The FSA’s announcement confirms earlier reporting by Nikkei from earlier in November. The project is viewed as a step toward modernizing Japan’s financial infrastructure. The banks aim to enable faster digital transactions across institutional networks.

Last week, startup JPYC launched the world’s first stablecoin pegged to the Japanese yen. The company backed the coins with domestic savings and Japanese government bonds. This launch preceded the banks’ announcement by several days.

Stablecoins are digital assets pegged to fiat currencies like the dollar or yen. They typically avoid the price volatility common with cryptocurrencies like Bitcoin. However, some policymakers have raised concerns about whether issuers maintain sufficient reserves to back circulating stablecoins.

U.S. President Donald Trump has expressed strong support for stablecoins. Interest in these digital assets has grown globally in recent months. Some regulators worry stablecoins could facilitate fund flows outside regulated banking systems.

The three banking groups participating in the pilot are the financial arms of Japan’s largest financial institutions. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group, and Mizuho Financial Group collectively represent a major portion of Japan’s banking sector. Their joint participation demonstrates institutional commitment to digital payment development.

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