KAREN JOY BACUDO
Finance Editor
MUFG Bank, Mizuho Bank and Sumitomo Mitsui Banking Corporation plan to launch live commercial transactions using a jointly issued stablecoin in fiscal 2026. They have also agreed to establish a council to examine the framework for deploying the stablecoin.
The stablecoin is expected to be issued under a trust agreement in which the three banks will act as joint settlors, while a trust bank or similar institution will serve as trustee. They have signed a memorandum of understanding to establish a voluntary council to review operations, governance and other matters tied to the project.
The move brings together three of Japan’s biggest banking groups in one of the country’s most prominent efforts to test how blockchain-based payment instruments could be used in mainstream finance. Stablecoins and tokenised deposits have drawn growing attention from banks and regulators as they explore new ways to settle transactions and move money on digital networks.
The project follows a demonstration experiment selected last November for support under the Financial Services Agency’s FinTech Proof-of-Concept Hub. That work has served as the basis for joint discussions on issuing the stablecoin.
Trust structure
The proposed model centres on a trust arrangement rather than direct issuance by a single bank. Under that structure, the three banks would jointly establish the stablecoin’s terms, while the trustee would formally issue it.
The approach suggests the banks are seeking a framework that fits within Japan’s existing rules for digital payment instruments. Their review will continue with relevant laws and regulations, as well as market trends, in mind.
Council role
The new council is intended to serve as the main forum for examining how the stablecoin would work in practice. It will consider possible issuance infrastructure, system design, operating schemes, and governance structures.
Its remit also extends beyond the three founding institutions. The council will consider how to work with other financial institutions and relevant stakeholders that could join at a later stage.
This suggests the project may be intended as shared market infrastructure rather than a closed arrangement for use only among the three banks. In Japan’s banking sector, where large institutions often play central roles in payment rails and settlement systems, broader industry participation could be important if a bank-backed stablecoin is to move beyond pilot use.
Broader context
Japanese financial groups have been exploring blockchain-based payments for several years, but commercial deployment has remained limited. Regulatory scrutiny, technical integration and questions over governance have all contributed to a cautious pace.
The three-bank initiative stands out because of the scale of the institutions involved. MUFG, Mizuho and SMBC sit at the core of Japan’s financial system, and a joint effort among them may carry more weight with corporate users, regulators and other banks than a trial by a single institution.
Interest in stablecoins has widened globally as policymakers and market participants assess their use in cross-border payments, treasury management and tokenised financial markets. In many jurisdictions, banks have been weighing whether deposit-based digital money, tokenised bank liabilities or regulated stablecoins offer the most practical route for real-world settlement.
The Japanese project appears aimed at testing that question through actual business transactions rather than a purely technical trial. The banks are targeting live commercial transactions in fiscal 2026, signalling a shift from concept work toward operational use.
Much will depend on how the legal and governance model is finalised and whether the council can align the interests of multiple parties around a common structure. Questions such as redemption, settlement finality, operational control and interoperability with existing banking systems are likely to shape the next phase of work.
For now, the banks have set out a timetable and organisational framework for moving the effort forward. The council will be the vehicle for examining the design of systems, schemes and governance structures.