Japan’s three megabanks to jointly issue yen-pegged stablecoin by end of fiscal 2026

Three of Japan’s biggest banks, MUFG Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank, are in line to co-issue a stablecoin pegged to the Japanese yen before the end of Japan’s fiscal year 2026 in March 2027, according to reports coming out of Japan.

The three financial institutions are close to signing a formal agreement and plan to create a dedicated council to work through operational details and potential commercial uses for the token, according to Nikkei.

Japan’s financial regulator, the Financial Services Agency (FSA), has been involved in the plans to create the stablecoin since at least November 2025, when the three involved banks began initial tests geared towards a joint stablecoin issuance under the regulator’s supervision.

Stablecoin details and Japan FSA involvement

The general direction and timeline, as well as the FSA’s role, have been outlined, but the banks have not published any particular details regarding the collaboration or expanded fully on the technical aspects involved.

Multiple uncertainties remain, including if the stablecoin will serve retail customers, institutional counterparties, or both. In addition, cross-border payment capability and compatibility also remains unsure. There are also limited details regarding the custodial arrangements and reserve infrastructure for the joint stablecoin.

Japan had passed legislation in 2022 defining stablecoins as a form of digital money and restricting stablecoin issuance to licensed banks and trusts. The FSA’s participation in the creation of the stablecoin signals regulator interest, and the view that a bank-led stablecoin is a potential piece of financial infrastructure and not just another experiment.

An earlier Nikkei report also noted that the FSA had actively encouraged the three banks to join forces rather than launch competing stablecoins individually. This is thought to have helped the project move from individual testing by each of the involved banks toward a single, jointly issued product.

Global stablecoin market sees further growth

The move comes as traditional financial institutions globally accelerate their work on tokenized deposits and fiat-backed stablecoins. Hong Kong’s monetary authority has also said that it expects stablecoin launches within its jurisdiction this year, according to PANews.

For the Japan financial market landscape specifically, the three megabanks control a large share of domestic deposits and payment flows. A stablecoin with their combined support and operating under FSA oversight could redirect some stablecoin settlement activity that currently runs through offshore dollar-denominated stablecoins like USDT and USDC.

However, bank-issued stablecoins still tend toward whitelisted access and relatively reduced use cases, limiting their liquidity contribution globally but strengthening their appeal for institutional and corporate treasury operations.