Japan is one of the major economies worldwide that established a complete legal framework for stablecoins at an early stage. With the official implementation of the 2023 amendments to the Act on the Settlement of Funds (Amended Funds Settlement Act), the issuance of yen stablecoins has moved from a legal gray area to clear regulation. In 2025, the market also saw the official launch of the first compliant yen stablecoin, JPYC. This article provides a comprehensive review of the development of Japan’s stablecoin regulations, three compliant issuance pathways, and the main cases currently in the market, for reference by Taiwan’s financial institutions and the crypto industry.
Japan’s Stablecoin Legislative Background: From the UST Crash to Regulatory Formation
In May 2022, the algorithmic stablecoin TerraUSD (UST) collapsed, drawing intense global attention to stablecoin regulation. Japan then accelerated legislative efforts. That same month of June 2022, Japan’s National Diet formally passed a stablecoin bill. The bill clearly defined stablecoins as digital assets that must be pegged to fiat currency and that guarantee holders’ ability to redeem at par value. It also limited issuance to only licensed banks, registered funds transfer businesses, and trust companies. This means that issuers outside Japan, such as Tether (USDT), as well as algorithmic stablecoins, cannot circulate compliantly within Japan.
In June 2023, the amended Act on the Settlement of Funds officially took effect. It formally defined fiat-collateralized stablecoins that meet the conditions as “Electronic Payment Instruments (EPIs),” establishing a complete system for issuer qualifications, intermediary registration, and user protection. In May 2025, Japan further amended its regulations, relaxing the reserve requirements for trust-based stablecoins. It allows up to 50% of reserve assets to be held in short-term government bonds with a remaining maturity of no more than three months, replacing the prior requirement that all funds must be stored in current account deposit accounts.
Three Compliant Issuance Pathways: Who Can Issue Stablecoins in Japan?
Under the amended Act on the Settlement of Funds, the qualifications to issue stablecoins compliantly within Japan are divided into three categories, each with different thresholds and restrictions:
Path One: Bank-Issued Type (EPI No. 1 and No. 2) Financial institutions holding a banking license can directly issue stablecoins, corresponding to EPI No. 1 (general circulation type) and EPI No. 2 (exchangeable with No. 1). In this pathway, the transfer counterparties are limited to addresses that have completed KYC identity verification, and there is no upper limit on transfer amounts. Representative cases include GYEN (issued in the U.S. by a GMO subsidiary) and DCJPY, which is planned.
Path Two: Specific Trust Company Type (EPI No. 3—Trust Beneficiary Right Type) This is currently the most mainstream issuance structure among Japan’s large financial institutions. The issuer must deposit fiat currency of equivalent value into a trust bank; the trust bank, as trustee, manages the assets, and stablecoins corresponding to the minted quantity are issued on a public chain. This pathway provides bankruptcy-remote (bankruptcy-remote) protection: the trust funds, by law, are independent of the issuer’s assets, and it is considered the safest public-chain stablecoin structure available today. Transfer counterparties may include addresses that have not completed KYC, and there is no upper limit on transfer amounts. Representative cases include Progmat Coin developed by Mitsubishi UFJ Trust Bank, and JPYSC planned to be launched by SBI Holdings in Q2 2026.
Path Three: Funds Transfer Business Type (EPI No. 1 and No. 2) A non-bank fintech company that completes registration as a “Funds Transfer Business” with the Financial Services Agency (FSA) can also obtain stablecoin issuance qualification. This pathway has a relatively lower threshold, making it suitable for new startups to enter. A representative case is JPYC Inc., which became the first company in Japan to obtain this qualification in August 2025, and then officially launched the yen stablecoin JPYC on October 27 of the same year.
It is worth noting that, regardless of which issuance pathway is used, intermediaries engaged in buying and selling, exchanging, managing, or mediating stablecoin activities must register with the FSA as “Electronic Payment Instrument Service Providers (EPISP)” and fulfill obligations such as anti-money laundering (AML), user protection, and asset segregation.
Current Market Developments: From Progmat to JPYC, Japan’s Yen Stablecoin Ecosystem Accelerates
Japan’s stablecoin market started quickly once the regulations became clear. Multiple important milestones are already in place:
Progmat Coin (Mitsubishi UFJ): The Progmat platform, led by Mitsubishi UFJ Trust Bank, serves as the core infrastructure for Japan’s trust beneficiary right type stablecoin. Progmat initially started as an internal project at MUFG, but later transformed into a neutral platform jointly held by institutions including Mizuho Bank, SMBC, JPX, and SBI. In September 2024, MUFG, SMBC, and Mizuho’s three major banks jointly launched Project Pax. Using the SWIFT API framework to bridge cross-chain stablecoin routing, the goal is to enable cross-border enterprise payment settlement among the three banks, with commercialization expected in 2025.
JPYC (JPYC Inc.): JPYC Inc., a Tokyo fintech company, is an early mover in Japan’s stablecoin market. After obtaining funds transfer business qualification in August 2025, it officially issued Japan’s first compliant yen stablecoin, JPYC, on October 27, 2025. At the same time, it launched the issuance and exchange platform “JPYC EX.” JPYC uses 100% reserves backed by bank deposits and Japanese government bonds (JGB). It supports three public chains: Ethereum, Polygon, and Avalanche. The goal is to reach a circulating scale of 10 trillion yen within three years. Circle is an early investor in JPYC, and the two plan to build an on-chain JPY–USDC direct exchange channel via Circle’s StableFX system.
SBI × Circle USDC: In March 2025, SBI VC Trade completed EPISP registration, becoming Japan’s first legal trading platform for USDC circulation. In August 2025, SBI and Circle also formally established a joint venture company dedicated to Japan’s USDC circulation business.
JPYSC (SBI × Startale): SBI Holdings and Web3 infrastructure provider Startale Group are cooperating to plan the release of the trust beneficiary right type yen stablecoin JPYSC in Q2 2026. SBI’s Shinsei Trust Bank will serve as the issuing institution, SBI VC Trade will handle circulation, and it is positioned for institutional-level cross-border settlement and tokenized asset DvP settlement.
Haneda Airport USDC Payment Trial: In January 2026, payment aggregator Netstars and Japan Airport Terminals initiated Japan’s first on-site storefront stablecoin payment pilot in Terminal 3 of Haneda Airport. USDC supports two stores—Edo Shokuhinkan (Time Hall) and Edo Eventkan (Edo Kaikan). Merchants receive payments settled in yen, and USDC/JPY exchange is automatically handled by the backend.
FSA Regulatory Sandbox: Payment Innovation Project (PIP)
To promote compliant innovation, on November 7, 2025, the FSA launched the “Payment Innovation Project (Payment Innovation Project, PIP)” as a regulatory sandbox for blockchain-based payments. The first PIP supporting case involved a stablecoin issuance regulatory compliance test jointly conducted by MUFG, SMBC, and Mizuho using Progmat. The test verified the applicability of regulations and user protection mechanisms when multiple banks jointly issue stablecoins. The PIP framework shows that Japan’s regulators are actively driving stablecoin deployment using an approach of “pilot first, then make rules.”
Key Timeline of Japan’s Stablecoin Regulations
The following are the key milestones in the development of Japan’s stablecoin regulations:
・June 2022: The National Diet passes the stablecoin bill, laying the legal foundation ・June 2023: Amendments to the Act on the Settlement of Funds take effect, formally establishing the Electronic Payment Instrument system ・March 2025: SBI VC Trade becomes Japan’s first compliant USDC circulation operator ・May 2025: Amended draft approved; up to 50% of trust-based reserves can be held in short-term government bonds ・August 2025: JPYC Inc. obtains Japan’s first stablecoin issuance qualification (funds transfer business) ・October 2025: JPYC officially launches; FSA launches the PIP Payment Innovation Project ・November 2025: The three major banks launch compliant testing for the Progmat PIP ・December 2025: SBI × Startale signs a memorandum of cooperation for JPYSC ・January 2026: The Haneda Airport USDC payment trial begins ・February 2026: JPYSC officially named; expected to be launched in Q2
Implications for Taiwan: Lessons from Japan’s Model
Japan’s stablecoin regulatory design has several features worth Taiwan’s consideration. First, the regulations clearly distinguish “issuers” from “intermediaries,” enabling different types of institutions to play their respective roles and reducing overall compliance costs. Second, the trust beneficiary right architecture provides bankruptcy-remote protection, which is currently the best balance between safety and flexibility. Third, the FSA’s PIP regulatory sandbox model allows financial institutions to conduct tests within the regulatory framework, avoiding the stalemate of “waiting for complete regulations before acting.”
Taiwan’s central bank publicly explained the impact of stablecoins on the money supply in 2025 and also is paying attention to potential impacts on Taiwan’s businesses from offshore regulations such as the GENIUS Act. As a major economy in Asia that completed stablecoin legal formalization at an early stage, Japan’s issuance pathway design, trust architecture, and regulatory sandbox model are all important references for Taiwan when drafting local stablecoin policies.
This article, Japan’s Stablecoin Regulations—Full Breakdown: From the Act on the Settlement of Funds to the JPYC Launch; Understand the Three Compliant Issuance Pathways at a Glance. First appeared on Chain News ABMedia.
