A month after the launch of Japan’s first stablecoin pegged to the yen, the country’s three largest banks have secured regulatory approval to conduct a trial of a joint stablecoin.
The Japanese Financial Services Agency (FSA) has given the green light to Sumitomo Mitsui Banking Corp., MUFG (Mitsubishi UFJ Financial Group), and Mizuho Bank to proceed with their initiative to issue a stablecoin. These three banks represent the largest financial institutions in Japan, collectively managing assets worth $6.8 trillion.
According to a report by local business newspaper Nikkei in mid-October, the banks had begun exploring the idea of a joint stablecoin project. The token will be issued on a Distributed Ledger Technology (DLT) platform developed by Progmat, a digital asset infrastructure solutions provider founded by MUFG, NTT Data, and several other major local banks.
This initiative, named the Payment Innovation Project (PIP), has now been officially approved by the FSA. In its announcement, the FSA stated that the approval reflects its commitment to fostering innovation within the payments sector.
“We are pleased to announce that we have decided to support the following proof-of-concept experiment as the first project under the Payment Innovation Project (PIP)—the 11th project supported by the FinTech Proof-of-Concept Hub,” the FSA said.
The regulator also stated that the results of the trial will be published once completed, highlighting key issues related to compliance and regulatory supervision. The first trial will focus on testing whether a stablecoin issued by multiple institutions can comply with Japan’s stringent banking and payments regulations.
Japan’s Stablecoin Race Heats Up
The three banks involved claim that the new stablecoin will be used for both inter-company and intra-company settlements. They aim to launch the first version by March next year. The stablecoin sector is becoming increasingly competitive, with both domestic and international players vying for market share, prompting the banks to accelerate their efforts.
Mitsubishi Corp., a sister company of MUFG and Japan’s largest trading company, will be one of the first large-scale users of the new stablecoin. Mitsubishi plans to use the token for internal settlements across its 200+ subsidiaries and for international remittances, expecting to reduce transaction time and costs.
The stablecoin will be pegged to the Japanese yen, with plans to integrate the U.S. dollar in late 2026. This will make it the second yen-pegged stablecoin in the market, following the launch of JPYC just a month ago. JPYC was introduced as a local alternative to the dominant USD-pegged tokens, which currently hold 99% of the stablecoin market. This dominance has raised concerns among governments worldwide about the potential threat to their monetary sovereignty.
Noritaka Okabe, CEO of JPYC Inc., believes the stablecoin market will continue to grow. He told Reuters that local stablecoin issuers could become significant buyers of Japanese government bonds (JGBs). “With the Bank of Japan tapering bond-buying, stablecoin issuers could emerge as the biggest holders of JGBs in the next few years,” he said. “While authorities may attempt to control the duration of bonds stablecoin issuers buy, it will be challenging to control the volume they hold. This trend will occur globally, and Japan is no exception.”
Saudi Arabia’s Stablecoin Gains Industry Support
While private firms are leading stablecoin initiatives in Japan, the government in Saudi Arabia is spearheading similar efforts. The Saudi Arabian government is working with the country’s Capital Markets Authority (CMA) and central bank on the development of a national stablecoin, as revealed last month by Majid Al-Hogail, the Minister of Municipalities and Housing.
Vivien Lin, Chief Product Officer at digital asset exchange BingX, explained that the stablecoin would elevate Saudi Arabia’s cashless payments sector. She stated that the new token will operate within an established payments framework, a “progressive and risk-aware” approach to ensure stability.
Saudi Arabia’s payment systems have undergone significant improvements over the past decade, with digital payments now accounting for 80% of all transactions. Stablecoins are expected to further enhance these systems by reducing settlement times from days to near-instant, cutting cross-border costs, and improving traceability.
“Stablecoins can advance the financial ecosystem when embedded in rigorous regulatory frameworks and aligned with national values. This approach reflects the Kingdom’s commitment to modernisation, consumer protection, and financial stability,” noted Michelle Daura, head of regulated regions at Bybit, a digital asset exchange.
According to data from Chainalysis, stablecoins accounted for 46% of all digital assets received in Saudi Arabia in 2024.