MUFG Bank, Mizuho Bank and Sumitomo Mitsui Banking Corporation (SMBC) have formed a council to develop a jointly issued yen-backed stablecoin. The banks are targeting a launch by the end of fiscal year 2026, which closes in March 2027. This is the first time three of Japan's largest private banks have moved toward a single shared digital currency product.
What did the three banks announce?
The banks confirmed the formation of a joint council to develop an operational framework for stablecoin issuance. The token will be pegged to the Japanese yen at 1:1. In their statement, the banks described the product as targeting "a wide range of use cases," though specific applications were not disclosed.
A pilot project among the three banks began in late 2025. The aim was to test whether "regulatory and practical compliance" could be carried out "legally and appropriately" when multiple banks issue a stablecoin together. The pilot concluded successfully, after which the banks moved to full-scale development.
The project runs under the FSA Payment Progress Project, a program within the Financial Services Agency's FinTech Proof-of-Concept Hub. The hub has supported blockchain-based payment experiments in Japan since 2017 and has cleared several major fintech pilots.
The decision to launch together rather than separately has a clear rationale. A shared stablecoin reaches the combined customer base of all three banks at once, while spreading operational costs and risks across participants.
How does the trust model work?
The banks chose a trust account structure already well-established in Japanese finance and now adapted for blockchain. All three megabanks will serve as joint settlors of the trust. A separate trust bank or similar institution will act as trustee, holding reserves and processing settlement for each transaction.
- Three founding banks contribute yen reserves into a shared trust
- An independent trust bank handles asset custody and settlement
- Each token is fully backed by yen reserves at 1:1
- Holders can redeem their tokens at face value at any time
- Transactions are recorded on blockchain, but regulatory oversight stays with the FSA
This structure keeps stablecoin reserves separate from the founding banks' own balance sheets. If one participant faces difficulties, customer funds held in trust remain protected.
Japan's amended Payment Services Act of 2023 limits stablecoin issuance to licensed banks, registered money transfer agents and trust companies. MUFG, Mizuho and SMBC already hold the required licenses. No additional approvals are needed before launch.
Why now? Japan's stablecoin push since 2023
Japan's stablecoin market has been building steadily since 2023, when amendments to the Payment Services Act created a clear licensing regime. In October 2025, JPYC Inc. launched JPYC, the country's first legally recognized yen stablecoin. In February 2026, SBI Holdings and Startale Group rolled out JPYSC for institutional and cross-border use. In May 2026, the Japan Blockchain Foundation announced EJPY on Ethereum and Japan Open Chain.
Dollar-pegged tokens also got the green light. In March 2025, USDC became the first approved dollar stablecoin in Japan, issued through SBI VC Trade. Ripple and SBI Holdings later announced plans for their own licensed stablecoin.
The three megabanks watched all of this and moved carefully. The late-2025 pilot answered the legal questions. With those resolved, they moved from testing to building a real product.
What does this mean for the stablecoin market?
The Japanese initiative fits a pattern seen across global banking: large institutions shifting from observation to product. JPMorgan, Citi and Bank of America are building a shared blockchain platform. Western Union launched its USDPT stablecoin. Mastercard connected USDT and RLUSD to card payments. The same model keeps appearing: a bank consortium rather than head-to-head competition.
For Japan specifically, a yen stablecoin from MUFG, Mizuho and SMBC could simplify domestic corporate settlements and cut the cost of cross-border transfers. The yen is underrepresented in crypto-denominated transactions compared to the dollar or euro. A stablecoin backed by the country's three biggest banks could shift that.
The banks will release specific use cases and platform details after the operational framework is finalized. The broader signal is already clear: when three systemically important banks in one country commit to a single blockchain product, it sets a template that other jurisdictions in Asia and beyond will be watching closely.
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