Japan’s Financial Services Agency (FSA) said it will support the country’s three largest banks in developing a proof of concept for issuing a stablecoin.
Japan’s financial regulator said the venture 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 continue for the foreseeable future, according to an FSA announcement Friday.
Stablecoins – digital tokens tied to the value of a traditional financial asset (TradiFi) such as 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 first yen-indexed stablecoin was unveiled at the end of October by the startup JPYC.
It is against this backdrop that TradFi institutions such as Japan’s largest banks, as well as regulators and lawmakers, are considering issuing stablecoins and integrating them into their existing financial and technology frameworks.
