MUFG, Sumitomo Mitsui, and Mizuho are jointly developing a stablecoin aimed at accelerating the digitalization of both domestic and international corporate payments.
Stablecoin Initiative by Japan’s Leading Banks
Japan is taking a significant step toward the future of digital payments. The country’s three largest banks – MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank – are joining forces to launch a stablecoin backed by the Japanese yen.
The project will be built on the platform developed by Tokyo-based fintech firm Progmat, in which the banks hold equity stakes. The goal is to establish common standards for corporate and inter-company use of stablecoins.
Yen First, Dollar Later
The project will begin with a stablecoin backed by the Japanese yen, expected to go into real-world use within the current fiscal year following a successful pilot phase.
Later on, the banks plan to issue a USD-backed stablecoin, expanding the system’s capabilities for international transactions.
Mitsubishi Corporation will be among the first companies to use the yen-backed stablecoin for internal financial operations. The corporation manages over 240 subsidiaries, including global entities, and regularly conducts dividend payments, acquisitions, and client transactions.
Benefits for Businesses and Clients
- Lower costs for fund transfers
- Simplified internal accounting and administrative processes
- Improved tracking and compliance with regulatory requirements
- Potential service to over 300,000 corporate clients
Project Pax – Cross-Border Payments via Blockchain
As early as September 2024, the three banks launched a pilot program for international transactions using a platform called Project Pax. The initiative aims to speed up cross-border payments via stablecoins issued through Progmat.
Besides the three banks, SBI Holdings and the Japan Exchange Group are also part of the project. Progmat, in collaboration with Datachain and TOKI, is building the infrastructure for cross-chain transactions to enable secure, fast, and interoperable international payments.
Technical Integration and Compliance
The platform uses the API system of SWIFT to allow banks to instruct Progmat on blockchain transactions. This enables full regulatory compliance, including anti-money laundering (AML) measures.
The solution reduces duplicated processes and investment costs typical of traditional fiat transfers. Full commercial rollout of the platform is expected in 2025.
Regulatory Framework
Japan’s Financial Services Agency (FSA) is expected to approve the first official yen-backed stablecoin by autumn 2025.
Conclusion
Through this initiative, Japan is clearly demonstrating its commitment to integrating blockchain and digital currencies into mainstream banking services. The joint project by the three megabanks may become a turning point in the transformation of both domestic and cross-border financial transactions.
Whether the yen-backed stablecoin becomes the new standard for corporate payments in Japan – remains to be seen.
Frequently Asked Questions
Find answers to the most common questions below.
MUFG, Sumitomo Mitsui, and Mizuho are jointly developing the stablecoin, backed by the Japanese yen.
It is expected to enter commercial use within the current fiscal year, pending regulatory approval.
Project Pax is a pilot program by Japanese banks aiming to facilitate cross-border payments using blockchain-based stablecoins.
This article is for general informational purposes only and is not intended to be, and should not be construed as, legal or investment advice. Crypto-assets are highly volatile, so only invest funds that you are willing to lose and use your own research and risk management.
