The Japan Financial Services Agency (FSA) announced that it has launched an initiative to support the yen-based stablecoin joint venture launched by the country’s major banks.
- Japan’s Financial Services Agency has launched the Payment Innovation Project to promote blockchain-based payment systems, beginning with a major stablecoin initiative launched by major banks like MUFG, SMBC and Mizuho.
- Japan’s FSA has been tightening its regulatory oversight of the crypto sector, proposing new rules on crypto lending and insider trading to enhance investor protection and market integrity.
According to a recent press release, the FSA’s Payment Innovation Project will focus on supporting “the use of blockchain technology to enhance payments.” The project is intended to facilitate advancements in digital payments and was launched within the country’s FinTech Demonstration Hub.
The initiative is linked to a joint venture to issue stablecoins pegged to the Japanese yen established by major banks and institutions in the country, including Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMBC), and Mizuho Financial Group.
The consortium aims to launch a yen-pegged stablecoin and create a single platform for stablecoin payments, with the goal of modernizing institutional settlements and reducing transaction costs. The project will reportedly be built on MUFG’s stablecoin issuance platform Progmat, which has served more than 300,000 business partners.
Japan’s FSA confirmed that the joint stablecoin initiative will be the first project to be backed directly by the Payment Innovation Project or PIP. By extension, it is also the 11th project that the country’s FinTech Proof-of-Concept Hub supports.
According to the release, companies will start issuing payment stablecoins starting this month. As part of the partnership, participating companies must ensure that users are protected and well-informed about the systems in place.
“After the completion of the pilot project, the FSA plans to publish the results and conclusions of the project on its website, including issues regarding compliance and supervisory responses identified through the project,” wrote the Japan FSA.
Japan FSA zooms in on crypto regulations
In the past few months, the Japanese financial regulator has been focusing more on expanding oversight on crypto. On Nov. 7, Japan’s FSA held another meeting with the Financial System Council’s Working Group on Cryptocurrency Systems. The two bodies discussed the possibility of strengthening regulations on crypto lending.
The agency proposed bringing crypto lending under the Financial Instruments and Exchange Act to address existing loopholes related to “borrowing” cryptocurrency. The shift would also require stronger risk and custody controls on crypto lending.
On the other hand, the agency also suggested introducing an investment cap for Initial Exchange Offerings, based on the equity crowdfunding framework, to prevent overinvestment driven by market pressure.
Efforts by the FSA to restructure and update its rules on crypto have driven Bybit to temporarily pause onboarding of new users from Japan starting from Oct. 31. The exchange apologized for the inconvenience as it works towards aligning itself with the FSA’s regulatory framework.
Earlier in October, the Japan FSA announced that it would crack down on insider trading in crypto markets by granting authority to the Securities and Exchange Surveillance Commission that would enable them to probe projects suspected of violating the law. The commission would also be able to issue penalties or refer cases to law enforcement for criminal prosecution against crypto projects that engage in insider trading.
The new rules on crypto insider trading would be submitted to parliament sometime in 2026.
