Three of Japan’s largest financial institutions are preparing to jointly launch a yen-pegged stablecoin by the end of this year, signaling a major step forward in the country’s integration of blockchain technology into traditional banking systems. Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation, and Mizuho Bank are collaborating on this initiative, aiming to streamline intercompany transactions and promote wider adoption of digital currencies for business settlements.
The initiative will be built on the Progmat platform, a system developed by MUFG in 2023 to support bank-issued digital assets. This move follows the enactment of legislation in 2022 that restricts the issuance of stablecoins to licensed financial institutions, effectively barring non-banking entities from creating such tokens. This regulatory framework is designed to ensure that digital currencies in Japan remain securely backed and closely monitored.
The planned stablecoin will initially be tied to the Japanese yen and used to facilitate payments within and between companies. One of the first adopters of the token will be Mitsubishi Corporation, a conglomerate that oversees more than 240 subsidiaries. The firm expects that using the stablecoin for internal financial operations will significantly cut down on transaction fees and reduce bureaucratic overhead.
Although the initial focus is on a yen-backed digital currency, the participating banks have expressed intentions to develop a U.S. dollar-pegged version in the future. The rollout is expected to proceed after the completion of a proof-of-concept phase, which will test the infrastructure and performance of the token in real-world scenarios.
This development comes as Japan and other Asian countries intensify efforts to create regulatory clarity and support digital asset innovation. Japan’s Financial Services Agency (FSA) has already been working to approve the country’s first yen-pegged stablecoin, with expectations set for a release this fall. Under Japanese law, only banks, registered money transfer companies, and trust companies can issue stablecoins.
One of the key players in this regulatory environment is JPYC, a Tokyo-based fintech company that is currently undergoing registration as a money transfer provider. JPYC plans to issue a stablecoin fully backed by yen reserves, including both cash deposits and government bonds. The company’s CEO, Noritaka Okabe, believes that this kind of asset could stimulate demand in Japan’s bond market, similar to how U.S. stablecoin issuers like Tether and Circle have become prominent buyers of U.S. Treasury bonds.
Beyond Japan, other Asian financial hubs are also advancing their digital currency agendas. Hong Kong recently enacted its Stablecoin Ordinance, which took effect on August 1. The new legislation sets the stage for licensing stablecoin issuers, and the first licenses are expected to be granted early next year. At the same time, South Korea is laying the groundwork for stablecoin regulation with several bills under review in its National Assembly. A notable milestone was reached in September when BDACS, a digital asset custodian, and Woori Bank jointly launched KRW1, the first stablecoin pegged to the Korean won.
Notably, Japan has emerged as the Asia-Pacific region’s fastest-growing cryptocurrency market, surpassing traditional leaders like South Korea, India, and Vietnam. A recent report indicated that Japan experienced a 120% increase in on-chain transaction volume in the 12 months ending in June 2025. This growth has been largely attributed to progressive policy decisions and a favorable regulatory environment.
The upcoming launch of the yen-pegged stablecoin by Japan’s megabanks could serve as a model for other countries considering similar initiatives. By leveraging blockchain-based settlement systems, banks can offer faster, cheaper, and more transparent financial services, particularly in cross-border transactions and corporate finance.
Moreover, the move aligns with global trends as central banks and financial institutions explore the viability of digital currencies. Stablecoins, in particular, offer a bridge between the decentralized world of cryptocurrencies and the regulated domain of traditional finance. By anchoring the value of these tokens to fiat currencies and ensuring regulatory oversight, countries like Japan are aiming to harness the benefits of digital assets without compromising financial stability.
The planned stablecoin could also provide a competitive edge to Japanese institutions in global trade, where faster settlement and lower transaction costs are increasingly critical. As corporations look for more efficient ways to manage liquidity and reduce foreign exchange exposure, digitized yen settlements could become an attractive solution.
Additionally, integrating stablecoins into existing financial infrastructure opens up opportunities for automation through smart contracts, improved transparency, and real-time auditing. These features are especially beneficial for large-scale enterprises and financial institutions managing complex networks of partners and subsidiaries.
In conclusion, the joint effort by MUFG, Sumitomo Mitsui, and Mizuho Bank represents more than just a technical upgrade—it reflects Japan’s strategic ambition to be at the forefront of digital finance. As the nation continues to refine its regulatory framework and encourage innovation, stablecoins could become a cornerstone of Japan’s modern financial ecosystem.