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