Stablecoins and Crypto Payments in Japan: A Special Review

Introduction

As a global leader in technological innovation and financial prudence, Japan has taken a pioneering role in regulating stablecoins and integrating crypto payments into its economy. As digital assets reshape global finance, Japan’s calibrated approach provides a blueprint for striking a balance between innovation, consumer protection, and financial stability.

Regulatory Framework for Stablecoins

Japan’s journey into stablecoin regulation began with amendments to the Payment Services Act, which came into effect in June 2023. These changes established a clear legal framework for the issuance and circulation of stablecoins, particularly those pegged to fiat currencies, such as the Japanese yen. And this framework positions Japan as one of the first major economies to regulate stablecoins with such clarity and rigour.

Yen-Pegged Stablecoin Initiatives

Japan’s stablecoin ecosystem is rapidly evolving, with several notable initiatives. For instance:

1. JPYC Inc. launched a yen-pegged stablecoin, JPYC, which operates under prepaid payment instruments regulations. It is backed by Japanese government bonds and aims to facilitate low-cost, fast transactions.
2. MUFG’s Progmat Coin, Mitsubishi UFJ Financial Group (MUFG) introduced Progmat Coin, a platform enabling banks to issue their own stablecoins. It supports interoperability and compliance with Japan’s legal standards.
3. Multi-Bank Pilot Program: In late 2025, major banks, including MUFG, SMBC, and Mizuho, began testing a multi-bank stablecoin issuance model. This pilot explores operational and legal frameworks for collaborative digital currency issuance.

These efforts reflect Japan’s commitment to fostering a secure and scalable stablecoin ecosystem.

Crypto Payments: Adoption and Innovation

Japan’s crypto payment landscape is also transforming. Crypto holdings among Japanese investors reached ¥5 trillion ($33 billion) in mid-2025, signalling a rising adoption rate and public interest despite past exchange failures. Merchants and service providers are increasingly accepting crypto payments, particularly stablecoins, for their low volatility and fast settlement. The Financial Services Agency (FSA) has shown openness to easing certain crypto regulations, encouraging innovation in areas like leveraged trading and decentralized finance (DeFi). Lastly, the Bank of Japan continues to explore a Digital Yen (CBDC), conducting pilot programs to assess its feasibility alongside private stablecoins. These developments suggest a shift from speculative crypto use toward practical, everyday applications.

Future Outlook

Japan’s stablecoin regulation and crypto payment initiatives reflect a strategic vision to harness the benefits of digital assets while safeguarding financial integrity. By enabling regulated stablecoin issuance and promoting crypto payment adoption, Japan is laying the groundwork for a digital economy that is both innovative and resilient.

As global interest in stablecoins and CBDCs grows, Japan’s model may serve as a reference point for other nations seeking to navigate the complex intersection of finance, technology, and regulation.

Stablecoins and Crypto Payments in Japan: A Special Review was originally published in Pundi X on Medium, where people are continuing the conversation by highlighting and responding to this story.