KEY INSIGHTS
- The three largest Japanese banks have conducted tests on the issuance of stablecoins and payment transactions across borders between July 17 and 23, 2026.
- The pilot validated issuance transfer and cash redemption processes among others.
- The banks aim to launch live yen stablecoin transactions in fiscal 2026 as further assessments continue.
Japan’s three biggest banks have already completed a pilot program that involved testing their own yen stablecoin issued together. The tree banks include Mizuho Bank, MUFG Bank, and Sumitomo Mitsui Banking Corporation, as well as Mitsubishi UFJ Trust and Banking Corporation and TISI.
The pilot program conducted payment simulations between Mitsubishi Corporation’s head office in Japan and its international branches. Participants tested the process from issuing the stablecoin and transferring it between parties to redeeming it for cash. The companies also reported that the experiment confirmed the system’s safety and reliability.
The results mark a completed testing phase for Japan’s three-bank stablecoin initiative, which is targeting the start of live transactions during fiscal year 2026. The participating institutions said they would continue examining the requirements for practical implementation.
Japan Yen Stablecoin Pilot Tests Cross-Border Payments
The test pilot studied the feasibility of a number of banks issuing and supporting a stablecoin denominated in yen through coordination of the necessary processes for international payments.
Source: DustyBC Crypto
The banks involved developed the verification framework and performed the test pilot along with Mitsubishi UFJ Trust and Banking Corporation and TISI. The test included operational procedures related to multi-party arrangements for issuance processes, along with the performance of the system for various payment situations.
Anti-money laundering and counter-terrorist financing tests were also part of the assessment process. This was one of the methods through which it was decided if the proposed model would facilitate cross-border payments while meeting all the compliance issues.
The experiment followed the project’s selection in November 2025 for support through Japan’s Financial Services Agency FinTech Proof-of-Concept Hub, under its Payment Enhancement Project.
The organizations involved used this pilot project to determine the practical aspects of the multi-bank issuance system rather than transfer only. The scope of the pilot project encompassed not only the transactions but also all the necessary regulation and operational aspects supporting the service.
How the Banks Structured the Yen Stablecoin?
The stablecoin proposal for Japanese yen will use the trust-based issuance system where the issuers are Mizuho Bank, MUFG Bank and Sumitomo Mitsui Banking Corporation. Mitsubishi UFJ Trust and Banking Corporation will be the trustee of the trust system.
Moreover, the stablecoin was issued as specified trust beneficiary interests under Article 2, Paragraph 9 of Japan’s Payment Services Act. This structure allows the beneficiary interests to be transferred electronically while the trust bank manages the backing assets.
Under Japan’s legal framework, this form is classified as an electronic payment instrument rather than a crypto asset. The pilot examined regulatory compliance measures relevant to the banks’ service design, as well as practical approaches to user protection that the trustee would implement.
Sumitomo Mitsui Banking Corporation provided the blockchain infrastructure used in the experiment, with TISI handling development work outsourced by the bank. The arrangement brought together the three issuing banks, the trust bank and the technology provider in testing the system.
Deposit Backing and Verified Users Shape the Planned Service
The proposed commercial model is designed around deposits as the stablecoin’s underlying assets. The banks intend to focus on settlement and remittance needs, with circulation limited to users who have completed identity verification and other required procedures at the participating banks.
However, the institutions have presented these features as the current design assumptions for the service. They plan to continue reviewing the arrangements and addressing issues identified through the pilot before practical implementation.
The June 10, 2026, announcement outlined the banks’ intention to begin live transactions during fiscal year 2026. It also introduced plans to establish a council to examine operational arrangements and governance related to the jointly issued stablecoin.
The July test provided a further assessment of the issuance model and the processes required to support payments between Japanese and overseas business locations. The companies said they would use the findings to guide more detailed evaluations of the outstanding requirements for deployment.
