Japan's financial establishment is making its boldest move yet into digital currencies, with the country's three largest banks joining forces to issue a unified yen-pegged stablecoin that could reshape corporate payments across Asia's second-largest economy.
Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Banking Corporation (SMBC) and Mizuho Bank plan to launch the joint stablecoin by the end of 2025, according to a Friday report by Japanese business newspaper Nikkei.
The initiative will leverage MUFG's Progmat Coin platform, a blockchain infrastructure designed specifically for regulated stablecoin issuance.
A Unified Digital Currency for Corporate Japan
The consortium's ambitions extend beyond merely issuing another digital token. The three megabanks, which collectively serve more than 300,000 corporate clients, aim to create standardized tokens that can be used interoperably for both intra-company and inter-company payments.
This standardization could prove transformative for Japanese businesses, potentially slashing transaction costs and settlement times while modernizing payment infrastructure that has long relied on traditional banking rails.
Mitsubishi Corporation, the sprawling trading house with over 240 subsidiaries globally, will serve as the first entity to implement the stablecoin for internal settlements. The company plans to use the digital currency to streamline international transfers for dividends, acquisitions and customer transactions - potentially saving millions in fees and administrative overhead.
If successful, the project could establish Japan's first bank-backed stablecoin network under a unified framework, setting a precedent for how traditional financial institutions can embrace blockchain technology while maintaining regulatory compliance.
Built on Multi-Blockchain Infrastructure
The technical foundation for this ambitious project rests on Progmat Coin, MUFG's stablecoin issuance platform that was officially launched earlier in 2025. The platform supports stablecoin deployment across multiple public blockchains, including Ethereum, Polygon, Avalanche and Cosmos, with plans to expand to additional networks.
This multi-chain approach addresses a critical challenge in blockchain technology: interoperability. By enabling seamless transfers across different blockchain ecosystems, Progmat Coin aims to prevent the fragmentation that has plagued earlier digital currency initiatives.
"The basic architecture involves financial institutions interested in issuing stablecoins depositing an equivalent amount of fiat currency with MUFG's trust bank," Motoki Yoshida, marketing manager of TOKI, told Blockworks. "Progmat then issues an equivalent amount of stablecoins. The funds in the trust bank are bankruptcy-remote, making this potentially the most secure stablecoin for use on public blockchains."
The platform operates under Japan's revised Payment Services Act, which took effect in June 2023. Under this framework, stablecoins must be backed 100% by liquid assets such as bank deposits or government bonds, with monthly third-party audits ensuring transparency.
Project Pax: The Cross-Border Vision
The megabanks' stablecoin initiative builds on Project Pax, a cross-border payment platform announced in September 2024 that aims to revolutionize international settlements using blockchain technology.
Project Pax integrates stablecoins with the existing SWIFT messaging framework, allowing banks to instruct Progmat to settle transactions on blockchain networks while maintaining compatibility with traditional banking systems. This hybrid approach addresses anti-money laundering compliance requirements while avoiding the need to duplicate existing fiat transfer processes.
The platform, developed in collaboration with blockchain firms Datachain and TOKI, enables 24/7 cross-border payments - a significant upgrade over conventional correspondent banking that operates within limited business hours. The initiative aims to reduce investment costs and eliminate operational redundancy by leveraging blockchain's efficiency.
Growing Momentum in Japan's Stablecoin Race
The banks' initiative comes amid intensifying competition in Japan's emerging stablecoin sector. In August, the country's Financial Services Agency prepared to approve JPYC as the nation's first domestic yen-backed stablecoin issuer, marking a regulatory milestone.
Tokyo-based fintech startup JPYC maintains a 1:1 peg with the yen and backs each token with liquid assets including bank deposits and Japanese government bonds. The company has issued over 30 billion yen worth of tokens and claims nearly 100% of Japan's domestic stablecoin market.
"JPYC will likely start buying up Japanese government bonds in large quantities going forward," JPYC founder Noritaka Okabe wrote on X, noting that yen stablecoins could have a significant effect on Japan's bond market - mirroring how US stablecoin issuers have become major buyers of Treasury securities.
Financial services giant Monex Group also announced in August that it's exploring a yen-pegged stablecoin backed by Japanese government bonds. Chairman Oki Matsumoto warned the company risked "being left behind" if it didn't enter the stablecoin space, though he acknowledged the significant infrastructure and capital requirements involved.
Meanwhile, SMBC has partnered with Avalanche developer Ava Labs and Fireblocks to develop its own JPY-pegged coin, expected to launch in 2026, according to Crypto Briefing.
Binance Japan Partnership Signals Broader Adoption
The Progmat ecosystem received a significant boost in September 2023 when Binance Japan partnered with Mitsubishi UFJ Trust and Banking Corporation to explore stablecoin issuance using the Progmat Coin platform.
"Stablecoins are crucial for the broader financial ecosystem and these assets will fill an important role in financial services and are vital for Web3 adoption," Takeshi Chino, general manager of Binance Japan, said in a statement at the time.
The collaboration aims to issue stablecoins pegged to the Japanese yen and foreign currencies including the U.S. dollar, with the goal of accelerating Web3 adoption in Japan's tightly regulated financial sector. The partnership represents a convergence between traditional banking infrastructure and cryptocurrency exchange platforms.
Regulatory Framework Provides Clarity
Japan's proactive approach to stablecoin regulation stands in contrast to the fragmented frameworks in the United States and Europe. The country's revised Payment Services Act, implemented in June 2023, created three distinct pathways for stablecoin issuance: bank deposit-backed digital money, fund-transfer type stablecoins, and trust-type stablecoins.
This regulatory clarity has attracted global players while encouraging domestic innovation. Circle's USDC received approval as the first foreign stablecoin authorized in Japan in March 2025, demonstrating the FSA's willingness to work with international companies while developing domestic alternatives.
The megabanks' joint stablecoin initiative benefits from this mature regulatory environment, operating under the trust-type framework that offers flexibility in issuance while maintaining bankruptcy-remote protections through MUFG's trust bank structure.
The framework mandates that stablecoin issuers must be licensed as banks, money transfer services, or trust companies, ensuring full transparency and accountability over reserve backing. This structured approach reflects Japan's cautious yet forward-looking stance toward financial innovation.
Strategic Implications for Global Finance
The initiative also represents a strategic response to the dominance of U.S. dollar-backed stablecoins, which account for the vast majority of the $286 billion global stablecoin market. By creating a robust yen alternative, Japan aims to strengthen its currency's role in digital finance and reduce dependence on dollar-denominated digital assets.
For corporate users, the benefits extend beyond cost savings. The stablecoin infrastructure promises near-instantaneous settlement, enhanced transparency through blockchain records, and the ability to program complex payment logic using smart contracts - capabilities that traditional banking systems struggle to match.
"MUFG, SMBC, and Mizuho have come together to establish a stablecoin. This will be tethered to both the domestic and U.S. dollar markets," Coinfomania reported. "It is an important step toward the future of digital finance. This project aims to address the issue of cross-border payments."
The collaboration also highlights the growing significance of technological innovation in Japan's financial sector. By providing a secure and scalable platform, Progmat enables the participating banks to create a digital currency solution that meets global standards while fulfilling regulatory obligations.
As global finance increasingly embraces digital currencies, Japan's coordinated approach - combining regulatory clarity, institutional backing, and technological infrastructure - positions the nation as a potential leader in the next phase of financial innovation. The success or failure of this megabank consortium could influence how other developed economies approach the integration of blockchain technology into mainstream finance.
The coming months will reveal whether Japan's banking giants can deliver on their ambitious timeline and create a stablecoin ecosystem that truly bridges traditional finance and the digital economy.