Main Points：
- Collaborative Initiative: Mitsui Sumitomo Financial Group (FG) is set to jointly develop a stablecoin in collaboration with two US companies—Avalab and Fireblocks—and domestic system integrator TIS.
- Development Timeline: The project aims for a proof-of-concept in the second half of fiscal 2025, with plans for issuance in fiscal 2026.
- Defining Stablecoins in Japan: While Japan lacks a formal definition for stablecoins, the revised Payment Services Act classifies certain digital payment instruments as stablecoins. Recent developments include the launch of Circle’s USDC trading service and anticipation for domestic stablecoin projects.
- Market Impact: This collaboration by one of Japan’s leading megabanks is expected to significantly advance the adoption and expansion of stablecoins in Japan, potentially transforming both domestic and cross-border payment systems.
1. Introduction: Japan’s Next Big Step in Digital Finance
According to a report by Nikkei, Mitsui Sumitomo Financial Group (FG) is embarking on a groundbreaking project to develop its own stablecoin. The initiative involves a strategic partnership with two US companies—Avalab, known for developing the Avalanche blockchain, and Fireblocks, a global leader in digital asset custody and wallet services—along with Japan’s leading system integrator, TIS. This project marks a significant move by one of Japan’s foremost financial institutions toward embracing and shaping the future of digital currency.
2. The Collaborative Project and Development Timeline
Mitsui Sumitomo FG’s decision to collaborate with prominent US firms and TIS underscores its commitment to innovation in the digital asset space. The project is focused on creating a stablecoin that can serve as a reliable medium of exchange and support a range of financial applications. According to the report, the development is scheduled to begin with a proof-of-concept test in the second half of fiscal 2025. If successful, the stablecoin could be issued in fiscal 2026.
Avalab brings its expertise in developing Avalanche—a blockchain celebrated for its speed, scalability, and ability to create customizable “subnets.” Meanwhile, Fireblocks, with its robust custody and wallet solutions, has already built a strong reputation by serving major financial institutions including BNY Mellon, BNP Paribas, and ANZ Bank, as well as fintech companies like Robinhood and Revolut.
By partnering with TIS, a top domestic system integrator, Mitsui Sumitomo FG aims to leverage both global expertise and local technological strength to ensure that the project meets regulatory standards and market needs.
3. Defining Stablecoins in Japan and Recent Developments
In Japan, while there is no universally accepted formal definition of “stablecoin,” the revised Payment Services Act now classifies certain digital payment instruments as stablecoins. Typically, stablecoins are those digital currencies backed by fiat currencies such as the US dollar, designed to maintain a stable value. Recent developments in Japan include the launch of USDC trading services by Circle in March, sparking expectations for the introduction of a “domestic” stablecoin as well.
This new project by Mitsui Sumitomo FG is seen as a pivotal moment in Japan’s digital asset landscape. It could not only facilitate more secure and efficient crypto transactions domestically but also support broader applications such as cross-border payments and corporate settlements.
4. Potential Market Impact and Future Outlook
The entry of one of Japan’s leading megabanks into the stablecoin space is expected to have a profound impact on the market. By developing a stablecoin through a collaboration that includes well-regarded US companies and a top domestic integrator, Mitsui Sumitomo FG is poised to strengthen the ecosystem around digital payments and blockchain technology in Japan.
This initiative could lower barriers to entry for institutional investors and promote broader adoption of stablecoins, ultimately enhancing the overall financial infrastructure. Moreover, a robust, regulatory-compliant stablecoin developed by a major financial institution could become a key tool for both domestic transactions and international settlements, aligning Japan more closely with global digital finance trends.
5. A Milestone in Japan’s Digital Finance Evolution
Mitsui Sumitomo FG’s venture to develop a stablecoin in partnership with US firms Avalab and Fireblocks, together with domestic technology leader TIS, signals a major milestone for Japan’s financial sector. With plans for a proof-of-concept in fiscal 2025 and potential issuance in fiscal 2026, this project reflects the growing momentum for digital innovation in Japan.
By advancing stablecoin technology, the initiative promises to enhance the efficiency and security of digital payments while opening new avenues for both domestic and cross-border transactions. For investors and market participants, this development represents a significant step toward a more integrated and forward-looking financial system in Japan.
