Japan FSA Approves Major Stablecoin Pilot With Mizuho, MUFG and SMBC to Advance Digital Payment S...

Japan FSA supports a stablecoin pilot with major banks to test digital payment systems.

The project studies how banks can issue stablecoins under Japan financial laws.

The pilot begins in November 2025 under the new Payment Innovation Project.

The Financial Services Agency (FSA) in Japan has given a pilot program to implement the issuance of stablecoins by three biggest banks in the country. The initiative includes Mizuho Bank, MUFG, and SMBC, which is a coordinated measure of the development of digital payment systems

Alongside the banks, Mitsubishi Corporation, Progmat Inc., and Mitsubishi UFJ Trust and Banking Corporation will participate. The project aims to explore how banking groups can jointly issue stablecoins under Japan’s legal framework for electronic payment instruments.

Focus on Regulatory Compliance and Practical Implementation

The FSA stated that the pilot will assess whether the issuance and operation of such stablecoins can align with existing financial laws. It will also test if these processes can be executed lawfully and appropriately within current regulatory structures. The operational efficiency, data management and security parameters will be tested in the experiment

The centrality of compliance will be the core of the study, where the stablecoin system will be under stringent financial regulation. The institutions involved are supposed to share information and technical know-how during the pilot stage.

Integration with Japan’s Payment Innovation Project

This initiative represents the first major program under the FSA’s new Payment Innovation Project (PIP). The PIP was launched within the agency’s existing FinTech Proof-of-Concept Hub, which has been active since 2017. The hub supports experimental fintech solutions and helps financial institutions test new technologies in a controlled environment

The FSA plans to use the PIP to boost the innovation in blockchain-based payment and improve the existing digital financial infrastructure in Japan. The trial of stablecoins will be the basis of regulation patterns and potential mass implementation.

Expected Timeline and Broader Implications

The project will start in November 2025 and is expected to last indefinitely. It will be followed up, and its results will be reported on the website of FSA. These findings will include legal interpretations, compliance assessments, and recommendations for stablecoin use in domestic payments. The pilot is considered a major step towards financial network modernization in Japan. Japan recently allowed banks to hold Bitcoin and offer crypto services under stricter financial rules and oversight.

It is also an indication of the willingness of the government to establish a safe and effective digital economy. The partnership between the large banks is an indicator of a joint effort to establish reliable digital payment systems and make them consistent with the objectives of public policy.

Earlier this year, Japan’s FSA proposed new crypto rules with two asset types and planned to align digital assets with securities laws by 2026. The stablecoin experiment is an indicator that Japan is still trying to find equilibrium between financial innovation and regulation.