Japan’s Financial Services Agency (FSA) said it will support the country’s three largest banks in developing a proof of concept for the issuance of a stablecoin.
Japan’s financial regulator said the company will allow Mitsubishi UFJ Financial Group (8306), Sumitomo Mitsui Financial Group (8316) and Mizuho Financial Group (8411) to explore the joint issuance of a stablecoin as an electronic payment instrument.
The experiment will begin this month and run for the foreseeable future, according to an FSA announcement on Friday.
Stablecoins – digital tokens pegged to the value of a traditional financial asset (TradiFi), such as a fiat currency – have seen considerable growth over the past two years, surpassing $300 billion in market capitalization last month.
This trend has also borne fruit in Japan, where the startup JPYC presented the first stablecoin linked to the yen at the end of October.
It is in this context that TradFi institutions, such as Japan’s largest banks, together with regulators and legislators, are exploring the possibility of issuing stablecoins and integrating them into their existing financial and technological frameworks.
