Japan’s Megabanks to Launch Yen-Pegged Stablecoin for Faster Payments

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Japan’s banking giants are stepping forward to explore new ways to make payments faster, simpler, and more efficient using digital currencies. 

This marks a shift in cross-border and corporate payments and another step closer to a future where traditional banking is increasingly embracing modern technology.

Japan’s Top Banks Collaborate 

Three of Japan’s biggest banks, MUFG Bank, Sumitomo Mitsui Banking Corp., and Mizuho Bank are joining forces to create a stablecoin, Nikkei reports.

The three megabanks plan to build their stablecoin using the platform of Tokyo-based fintech company Progmat, in which they all hold stakes. The banks aim to create common standards for the stablecoin so it can be used for both intra-company and inter-company payments.

Yen Stablecoin First, USD Later

The banks will start with a stablecoin pegged to the Japanese yen, with a U.S. dollar version planned for the future. They expect the yen stablecoin to be ready for practical use this fiscal year, following a proof-of-concept trial.

Japanese trading company Mitsubishi Corporation will begin using the stablecoin for internal financial settlements. Mitsubishi oversees more than 240 operating companies, which frequently make international payments for dividends, customer transactions, acquisitions, and investments.

Notably, the banks serve over 300,000 key clients, and widespread adoption of their stablecoin could help Mitsubishi slash remittance costs and lighten administrative workloads, both internally and externally. 

Cross-Border Payments Pilot

In September 2024, the three banks had announced a pilot for a cross-border stablecoin transfer platform, Project Pax, aimed at speeding up international settlements for businesses.

The project leverages stablecoins issued through Progmat, a blockchain startup backed by the three banks, as well as SBI Holdings and Japan Exchange Group. Progmat, together with Datachain and TOKI, manages the initiative and is facilitating testing of cross-chain transactions to ensure fast, secure, and compliant international transfers.

Project Pax will use SWIFT’s current API system to allow banks to instruct Progmat to settle transactions on blockchain networks. This setup helps tackle anti-money laundering and other regulatory compliance requirements. 

According to the project, it also allows financial institutions to avoid duplicating processes used in traditional fiat transfers and to reduce investment costs.

The initiative was set to begin with a prototype phase, with the goal of launching a fully commercial platform by 2025.

Meanwhile, Japan’s Financial Services Agency (FSA) is all set to approve the nation’s first yen-backed stablecoin as soon as fall 2025.

Japan is taking a leap toward the future of payments. By exploring stablecoins and blockchain, they are making it easier, faster, and cheaper for businesses to move money both inside Japan and across borders.