Japan’s Financial Regulator Backs Joint Stablecoin Initiative by Three Major Banks

Japan’s Financial Services Agency (FSA) has taken a clear step to test bank-led stablecoins. In a statement released on Friday, the regulator officially announced its support for a stablecoin pilot project involving the country’s three major banks. This move marks a notable instance of direct regulator backing for banks working together on a token tied to the yen.

FSA Supports Joint Stablecoin Project

The experiment unites Mizuho Bank, MUFG, and SMBC in a coordinated effort to issue a stablecoin for payments jointly. The alliance also includes Mitsubishi Corporation, Progmat Inc., and Mitsubishi UFJ Trust and Banking Corporation.

According to the FSA, the experiment will assess whether multiple banks can jointly issue and manage a single stablecoin while complying with rules on reserves, custody, and consumer protection. The project is scheduled to begin in November 2025 and is expected to continue indefinitely. Upon completion, the FSA intends to publish the results of the experiment, including legal, compliance, and supervisory insights on its official website.

Moreover, the pilot serves as the inaugural project under the FSA’s newly established Payment Innovation Project (PIP). The specialized initiative was launched on Friday to accelerate blockchain-based payment innovations. The PIP runs under the agency’s existing FinTech Proof-of-Concept Hub, which has been supporting fintech experiments since 2017.

Japan Pushes Payment Innovation

The announcement comes as regulators worldwide push to modernize payment systems. In Japan, the central bank and other officials have urged updates to financial rules to keep pace with new technology. They say stablecoins could transform how deposits and payments work across global markets. That broader push for innovation helps explain why the FSA is backing the bank-led experiment.

Japan’s biggest banks argue that a yen-backed stablecoin could make payments faster and cheaper for businesses moving money across borders. In practice, tokenized yen would enable companies to settle transactions directly on distributed ledgers, eliminating the need for several intermediaries. Moreover, the pilot will also test key safeguards regulators insist on, including transparent reserves and strong operational controls.

Ultimately, market analysts say the experiment could become a blueprint for how banks issue and manage tokenized currencies. They believe it could guide future applications in international and corporate payments. Adding to the momentum, startup JPYC launched the world’s first stablecoin pegged to the yen last week. The company backs the tokens with domestic savings and Japanese government bonds.