Japan's top three banks complete yen stablecoin pilot for cross-border payments
Mizuho Bank, MUFG Bank, and SMBC have successfully concluded a one-week trial of a jointly issued yen-pegged stablecoin for cross-border settlements, validating the technical and operational model under Japan's regulatory framework.
Japan's three largest banks have completed a joint pilot of a yen-pegged stablecoin for cross-border payments. The one-week trial, which ran from July 17 to 23, 2026, involved Mizuho Bank, Mitsubishi UFJ Bank (MUFG), and Sumitomo Mitsui Banking Corporation (SMBC), alongside Mitsubishi UFJ Trust and Banking Corporation and technology firm TISI.
The experiment, supported by Japan's Financial Services Agency (FSA) through its Fintech Pilot Hub, confirmed the feasibility of the multi-bank issuance model. Participants validated the full process of issuing, transferring, and redeeming the stablecoin for cash, simulating transfers between Mitsubishi Corporation's domestic headquarters and its overseas offices.
Technical and operational validation
The trial examined the complete lifecycle of the digital currency. The three banks acted as joint issuers, or principal trustees, under the structure of a specified trust beneficiary right as defined by Japan's Payment Services Act. Mitsubishi UFJ Trust and Banking served as the agent trustee, managing the bank deposits that back the coin's value.
SMBC supplied the blockchain platform, built by TISI, which also connected the digital wallet to the issuance system. The test proved the system's safety and reliability for handling cross-border settlements. It also explored how to manage operations with multiple issuers while meeting anti-money laundering and counter-terrorism financing requirements.
Only verified users who have passed identity checks can hold and use the coin. Because it is issued jointly by three major banks, the stablecoin can potentially reach all of their combined customer bases. The design anticipates large-scale distribution with no preset limit on total circulation.
Regulatory and market context
The project operates squarely within Japan's established Payment Services Act, with the FSA providing oversight. This regulatory clarity is a cornerstone of the initiative. The banks first unveiled plans to formalize an agreement in June, following an earlier pilot with the FSA launched in November 2025. The stated goal is to begin live transactions within the current fiscal year ending March 2027.
Market readiness for such digital assets appears to be growing. A recent Visa survey across 14 Asia Pacific markets found that 46% of respondents are likely to use stablecoins in the next five years. However, awareness remains a hurdle. Visa said "just 6% of the respondents depicted an accurate understanding of stablecoins."
The banks have declared the trial a success but note the design could change before launch. Key priorities for the next phase include user protection, cybersecurity, and system stability. The participating institutions will now work to identify and solve remaining issues while collaborating with regulators in Japan and abroad to prepare for a live launch.
