Japan’s top financial watchdog, the Financial Services Agency (FSA), has given approval to a consortium of the country’s largest financial institutions to issue yen-backed stablecoins, marking a crucial step in modernizing Japan’s payment systems.
In a statement Published on Friday, the FSA said the initiative – dubbed the “Payments Innovation Project” – aimed to leverage blockchain technology to make domestic settlements faster and cheaper. Participants include Mizuho Bank, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation, Mitsubishi Corporation and Progmat, MUFG’s blockchain-based stablecoin platform.
The consortium represents Japan’s largest banking players, serving more than 300,000 corporate clients. Starting this month, they will begin issuing yen-pegged payment stablecoins, designed to streamline business-to-business transactions and improve the overall productivity of Japan’s financial ecosystem.
According to the FSA, the project will include user protection measures and full transparency around the systems used. Once the pilot is completed, the regulator plans to publish detailed findings and recommendations for wider adoption.
The move comes days after Tokyo-based fintech firm JPYC launched Japan’s first private yen-backed stablecoin, with seven companies reportedly preparing to onboard it.
A broader push toward crypto regulation
Japan has tightened and updated its crypto regulatory framework, signaling both caution and increasing openness to digital assets. Earlier this month, the FSA was reportedly considering rule changes that could allow banks to hold cryptocurrencies like Bitcoin for investment purposes – a major policy change.
At the same time, the Securities and Exchange Surveillance Commission is drafting new laws targeting crypto insider trading, giving regulators the power to investigate and punish suspicious trading activity.
Meanwhile, major exchanges are already adapting. Bybit, the world’s second-largest cryptocurrency exchange by volume, recently announced that it would suspend new user registrations in Japan to comply with evolving rules.
Japan’s latest move to support stablecoin issuance – backed by its most powerful financial players – indicates that the country is taking a measured but incremental approach to blockchain innovation.
