Japan's three largest banks — Mitsubishi UFJ Financial Group (MUFG) Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank — signed a memorandum of understanding to form a joint council for issuing a yen-backed stablecoin by the end of FY2026. The banks plan to conduct commercial transactions using a stablecoin issued under a trust agreement during FY2026, with a target to launch live transactions before March 31, 2027. The initiative follows Japan's 2022 Payment Services Act amendments, which established a legal framework allowing only licensed money transfer companies, trust companies, and banks to issue yen-denominated tokens, as financial authorities push to expand the yen-based digital asset market.
Three Megabanks Sign MoU to Form Stablecoin Council
In a Wednesday statement, the three megabanks revealed their plan to conduct commercial transactions during FY2026 using a stablecoin issued under a trust agreement, where the three banks will serve as joint settlors and a trust bank or similar entity will act as trustee. The banks announced they have signed a memorandum of understanding to form a joint voluntary council to review operational frameworks, governance, and related issues to support the token's practical implementation.
According to the statement, the council will serve as a framework for examining the potential development of an issuance infrastructure related to the stablecoin, as well as the design of systems, schemes, and governance structures. The three banks will also accelerate their efforts to support the potential use of these tokens across a wide range of use cases, aiming to launch live transactions of the joint stablecoin before March 31, 2027. The council will also consider collaborations with financial institutions and other relevant stakeholders that may join the project in the future.
The megabanks, which serve over 300,000 companies combined, began exploring the launch of a joint stablecoin in late 2025. In November, the banks announced a pilot project under the Financial Services Agency's (FSA) Payment Innovation Project. The pilot used the infrastructure of Tokyo-based fintech company Progmat and aimed to gather practical knowledge on the joint issuance of a stablecoin and advanced cross-border payments.
Japan's Regulatory Framework for Yen-Backed Stablecoins
In 2022, Japanese authorities amended the Payment Services Act to establish a legal framework for stablecoins. Under the new regime, only licensed money transfer companies, trust companies, and banks are allowed to issue yen-denominated tokens.
Tokyo fintech company JPYC launched the first yen-pegged token, JPYC, in October, backed by yen reserves, including bank deposits and government bonds. Earlier this year, SBI Holdings partnered with Startale Group for JPYSC, a trust bank-backed yen stablecoin for institutional and cross-border use cases.
Last week, Japan's Liberal Democratic Party (LDP) called for the creation of rules for crypto exchange-traded funds (ETFs) and the promotion of yen-denominated stablecoins in the region in a new proposal to the government. Junichi Kanda, a lawmaker on the ruling party's panel, stated that the LDP pushed the government to boost the use of yen stablecoins in the region. "We urged the government to take steps to promote yen stablecoins for settlement in Asia in the future," he stated. The lawmaker also said that Japan could promote yen-based tokens and blockchain innovation next year, when the country hosts the Asian Development Bank's annual meeting.
The FSA recently expanded the Cabinet Office Ordinance to recognize certain trust-type stablecoins issued by foreign trust banks and similar entities as electronic payment instruments under the Payment Services Act.
FAQ
What is the joint stablecoin planned by Japan's three megabanks?
The joint stablecoin is a yen-backed digital token to be issued under a trust agreement by MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank. The three banks will serve as joint settlors, with a trust bank or similar entity acting as trustee. The banks signed a memorandum of understanding to form a council to review operational frameworks and governance for the token's implementation.
When will the three megabanks launch commercial transactions with the stablecoin?
The banks plan to conduct commercial transactions using the stablecoin during FY2026, with a target to launch live transactions before March 31, 2027. A pilot project under the FSA's Payment Innovation Project was announced in November, using infrastructure from Tokyo-based fintech company Progmat.
What regulatory framework governs yen-denominated stablecoins in Japan?
In 2022, Japanese authorities amended the Payment Services Act to establish a legal framework for stablecoins. Under this regime, only licensed money transfer companies, trust companies, and banks are allowed to issue yen-denominated tokens. The FSA recently expanded the Cabinet Office Ordinance to recognize certain trust-type stablecoins issued by foreign trust banks as electronic payment instruments under the Payment Services Act.
