Stablecoins in Japan: Current Status and Key Challenges
In recent years, discussions around stablecoins in Japan have made significant progress as regulatory frameworks have been put in place.
In this article, we outline the current state of stablecoins in Japan, highlight several concrete initiatives, and examine the challenges that remain ahead.
Japan as an Early Mover in Regulation
One of the defining features of Japan’s stablecoin landscape is the relatively clear legal framework that has been established. With the revision of the Payment Services Act in 2023, stablecoins in Japan were officially categorized as “electronic payment instruments,” and rules regarding issuers and asset backing were clarified.
Under this framework, the issuance of stablecoins is primarily limited to trust banks, trust companies, and registered fund transfer service providers. The goal of this system is to enable the use of digital currencies while ensuring user protection and maintaining the stability of the financial system.
Alongside regulatory development, the Financial Services Agency (FSA) has also supported pilot projects and the exploration of new services by financial institutions and companies.
Emerging Initiatives in Japan
As regulatory clarity has improved, concrete initiatives involving stablecoins are gradually expanding in Japan.
One notable example is JPYC, a yen-denominated stablecoin issued by JPYC Inc. JPYC is designed as a digital currency whose value is linked to the Japanese yen, and its use has been gradually expanding within Japan’s web3 community. Various applications such as blockchain-based transfers and payments are being explored, making JPYC an early example of stablecoin use cases in Japan. In 2026, Sony Bank announced a partnership with JPYC Inc. to explore the use of stablecoins within its banking app. The initiative aims to test the possibility of payments and transfers using stablecoins directly through the bank’s app. This effort has attracted attention as an attempt to connect bank accounts with blockchain-based digital currencies. However, as JPYC is structured under a fund transfer service provider framework (as opposed to a trust bank framework), it is subject to certain constraints, including a transfer limit of one million yen, which may limit its scalability as a payment infrastructure.
The SBI Group is also working with Startale Group to develop a yen-linked stablecoin. Their efforts aim to enable broader use cases, including cross-border payments and integration with web3 services.
Japanese financial institutions are also exploring this area. Sumitomo Mitsui Banking Corporation (SMBC) has been conducting pilot projects with Ava Labs and Fireblocks to test stablecoin issuance and payment infrastructure. These projects are examining potential use cases such as corporate payments and cross-border transfers, exploring the possibility of new payment infrastructure built on blockchain technology.
In the securities sector, stablecoin applications are also being explored. Mitsubishi UFJ Financial Group (MUFG) has developed a digital asset issuance platform called Progmat. In addition to issuing and managing tokenized securities (security tokens), the platform is also testing settlement mechanisms using stablecoins. Financial institutions including Daiwa Securities and SBI Securities are participating in experiments that combine tokenized securities with digital currency settlement on blockchain networks.
Overall, banks, securities firms, and web3 companies in Japan are exploring stablecoin use from different perspectives, and efforts toward building an ecosystem are gradually progressing.
Challenges Toward Wider Adoption
At the same time, several challenges remain for the wider adoption of stablecoins in Japan.
One challenge is the restriction on issuers. Under Japan’s regulatory framework, the issuance of stablecoins is limited to banks, trust companies, and licensed fund transfer service providers. In particular, for stablecoins intended to support broader payment use cases, trust bank structures are often required in practice, which raises the barrier to entry. While this structure plays an important role in protecting users, it can also make it more difficult for new players to enter the market.
Another challenge lies in the expansion of use cases. While many pilot projects are currently underway in Japan, stablecoins have not yet reached the stage of widespread adoption in everyday transactions among general users. This is due in part to tax-related constraints, which limit the attractiveness of crypto-based investments. Coupled with the fact that bank transfers and cashless payment systems are already well established in Japan, significant user experience and/or economic improvements must be clearly demonstrated for stablecoins to amass extensive consumer adoption.
Finally, for stablecoins to function as part of financial infrastructure, the development of a secure and reliable shared foundation is essential. At present, however, such infrastructure cannot yet be said to be fully established in Japan. Many elements still need to be addressed, including wallets, payment networks, on-ramps and off-ramps, and compliance systems. How Japan builds infrastructure that combines reliability with regulatory compliance will likely become a key factor in the future development of stablecoins in the country.
