According to reports from Japan, Japan’s three largest banks, Bank of Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank, are arranging to jointly issue a stablecoin pegged to the Japanese yen by March 2027, when Japan’s 2026 fiscal year ends.
According to the Nikkei Shimbun, the three financial institutions are close to signing a formal agreement and plan to establish a dedicated council to consider operational details and potential commercial use of the tokens.
Japan’s financial regulator, the Financial Services Agency (FSA), has been involved in plans to create a stablecoin since at least November 2025, and the three banks involved have begun initial tests to jointly issue a stablecoin under the regulator’s supervision.
Details of stablecoins and the involvement of the Japanese Financial Services Agency
While the general direction and timeline, as well as the role of the Financial Services Agency, have been outlined, the banks have not released specific details about the partnership, nor have they fully explained the technical aspects involved.
Multiple uncertainties remain, including whether stablecoins will serve retail customers, institutional investors, or both. Additionally, cross-border payment capabilities and compatibility remain unclear. Details regarding the custodian and preparation infrastructure of the joint stablecoin are also limited.
In 2022, Japan passed a bill that defines stablecoins as a type of digital money and limits stablecoin issuance to licensed banks and trusts. The Financial Services Agency’s participation in the creation of stablecoins shows the regulator’s interest and view that bank-led stablecoins are a potential part of the financial infrastructure, not just an experiment.
A previous Nikkei Shimbun report also noted that the Financial Services Agency was actively encouraging the three banks to collaborate rather than issuing competing stablecoins individually. This likely helped the project move from individual testing by each bank involved to a single co-issued product.
Global stablecoin market aims for further growth
The move comes as traditional financial institutions globally accelerate their efforts in tokenized deposits and fiat-backed stablecoins. According to PANews, Hong Kong’s financial authorities have also said that they expect stablecoin issuance to begin within the Hong Kong jurisdiction this year.
Particularly in the context of the Japanese financial market, three megabanks control the majority of domestic deposit and payment flows. If stablecoins were supported in combination and operated under the supervision of the FSA, it could potentially redirect some of the stablecoin payment activity that currently takes place through offshore dollar-denominated stablecoins such as USDT and USDC.
However, bank-issued stablecoins still access whitelists, tend to have relatively few use cases, and have limited contribution to liquidity globally, although their appeal to institutional investors and corporate treasury operations is growing.
