Japan’s FSA 2026 regulatory push for stablecoin issuers

The Financial Services Agency (FSA) designated blockchain-based on-chain finance as its top 2026 policy priority. This designation covers payments, securities settlement, tokenization, and cross-border transfers. The FSA aims to implement measures from a broader financial strategy adopted in July, which includes blending blockchain with existing financial infrastructure to help Japanese companies restructure and channel capital toward targeted industries through these new digital frameworks. After July legal amendments classified cryptocurrencies as financial products, the agency established a standalone Cryptocurrency and Stablecoin Division in August to manage digital asset oversight and innovation efforts. The agency also plans an On-chain Finance Forum for the AI Era, a Study Group on Digital and Decentralized Finance, and a Study Group on Promoting the Sound Use of AI and Related Technologies. These bodies will examine technical, regulatory, and supervisory questions through demonstrations and back-and-forth between public and private participants. Under a June 1 bill, stablecoin issuers must peg assets to the yen or other legal tender and guarantee redemption at face value. This law limits issuance to licensed banks and trust companies. Regulators also intend to examine how AI agents could support financial services and how supervision should adapt as AI adoption increases.

Bank-led stablecoin adoption and tokenization

MUFG and other major banks lead the implementation of this framework via the Progmat platform. This platform supports bank-backed stablecoins on Ethereum, Polygon, Avalanche, and Cosmos. MUFG partnered with Datachain to allow for cross-chain transactions, lending, and swaps between these four blockchains. JPYC intends to issue ¥1 trillion in stablecoins over three years, using bank deposits and Japanese government bonds to maintain its 1:1 yen peg. This issuance could increase demand for Japanese government bonds and impact market liquidity. JPYC targets use cases like carry trades, international remittances, and corporate payments.

Sony Bank also targets the Web3 market with its CONNECT app on Android, which provides NFT rewards. The bank also plans to issue a $1 million green security token on the Securitize blockchain. Sumitomo Mitsui Trust Bank manages these proceeds to support climate change and biodiversity projects. In July, SBI Global Asset Management partnered with DigiFT to launch a tokenized Japanese equity fund on Solana. SBI Holdings also formed a strategic partnership with the Solana Foundation to target stablecoins and institutional blockchain services. You should observe how these different blockchain ecosystems, including Solana and Ethereum, begin to interact under the new rules. Sony Bank also intends to establish a US-based trust subsidiary in July 2026 after receiving conditional approval from the OCC. This subsidiary follows a December 2025 partnership with Bastion Platforms to explore dollar-denominated stablecoin business. MUFG, Mitsubishi UFJ Morgan Stanley Securities, Mitsubishi UFJ Trust and Banking, and MUFG Bank are currently testing Japanese government bond repos on the Canton Network for automated processing and 24-hour settlement.

Operational friction and regulatory hurdles

Operational friction persists as the industry reacts to regulatory shifts. LINE announced the closure of its US-based exchange, BITFRONT, to focus on its blockchain ecosystem. While MUFG tests Japanese government bond repos on the Canton Network, the FSA has not released a detailed roadmap or specific regulatory calendar for its 2026 priority. Compliance remains a hurdle because on-chain systems must meet strict anti-money laundering and customer identification requirements. Legal finality also poses a challenge, as the FSA must determine when a transaction becomes final on a distributed ledger compared to centralized systems. Some industry participants view the FSA’s designation as another exploratory phase rather than a commitment to production deployment. The FSA’s interest in blockchain also extends to shortening domestic stock transaction timelines from the current T+2 basis. Japan also plans to host "Asia Day 2027" during Japan Fintech Week to discuss regional payment corridors. Will the agency release supervisory guidance on tokenized assets before the program year ends?