Japan's Regulated Yen Stablecoin: SBI & Startale Lead Token Economy Shift

Introduction

Japanese financial giant SBI Holdings and Web3 infrastructure firm Startale Group have signed an MoU to develop a regulated Japanese yen stablecoin targeted for launch in Q2 2026. The stablecoin will be issued and redeemed by Shinsei Trust & Banking, a subsidiary of SBI Shinsei Bank, while SBI VC Trade, a licensed crypto asset exchange, will handle its circulation. SBI’s CEO Yoshitaka Kitao said the yen stablecoin is intended to become a core foundation of Japan’s emerging token economy, integrating digital financial services with traditional finance for both domestic and global use.

This initiative fits into Japan’s broader push to formalize stablecoin regulation and build robust onchain settlement infrastructure. The Financial Services Agency (FSA) has launched the Payment Innovation Project, a regulatory sandbox for blockchain-based payments, where the first pilot involves yen-denominated stablecoins issued by megabanks MUFG, SMBC and Mizuho. SBI and Startale’s project is designed to complement these bank pilots by delivering a programmable, trust-bank-issued digital yen for cross-border settlement, tokenized securities, and real-world asset (RWA) flows, positioning Japan as a leader in regulated blockchain finance.

SBI is also pursuing a broader multicurrency stablecoin strategy. In March, SBI VC Trade integrated Circle’s USDC stablecoin as Japan eased its stablecoin rules, making it one of the first local platforms to support USDC trading. Additionally, Ripple’s RLUSD stablecoin is slated to enter Japan in early 2026 through a partnership with SBI VC Trade, targeting enterprise-grade, regulated use cases. Together, these moves signal Japan’s accelerating crypto adoption, with yen and dollar stablecoins, bank-backed pilots, and regulated exchanges all contributing to a compliant, institution-friendly digital asset and stablecoin ecosystem in Asia.

Background

Japan is steadily positioning itself as one of the most serious jurisdictions for regulated stablecoins and on-chain finance. The latest move: Japanese financial conglomerate SBI Holdings and Web3 infrastructure firm Startale Group have signed a memorandum of understanding (MoU) to develop a fully regulated, Japanese yen–denominated stablecoin, targeted for launch in Q2 2026.

The stablecoin will be issued and redeemed by Shinsei Trust & Banking, a wholly owned subsidiary of SBI Shinsei Bank, and its circulation will be supported by SBI VC Trade, a licensed crypto asset exchange service provider. According to SBI’s representative director, chairman and president, Yoshitaka Kitao, the goal is to create a foundation for Japan’s transition into a token economy, where digital assets, tokenized securities, and real-world assets (RWAs) move seamlessly alongside traditional finance. The yen stablecoin is being designed from day one for tokenized asset markets, cross-border settlement, and enterprise-grade compliance.

For DeFi and fintech builders, this is not just another “new stablecoin” headline. It is a case study in how a G7 country is using law, trust banks, and licensed intermediaries to embed stablecoins directly into its regulated financial infrastructure.

Why Japan’s Stablecoin Framework Matters

Japan has spent years building one of the world’s most detailed regulatory frameworks for stablecoins. In 2022, amendments to the Payment Services Act (PSA) established clear rules for what Japan calls “digital money-type stablecoins”—tokens that are:

• Pegged to a legal fiat currency (such as the yen)

• Redeemable at face value

• Issued only by regulated entities such as banks, money transfer providers, and trust banks

This framework, which took effect in June 2023, made Japan one of the first major economies with a full legal regime dedicated to stablecoins, explicitly designed to protect users and support payments and settlement use cases.

Key elements of Japan’s approach include:

• Issuer restrictions

Only licensed banks, funds transfer services, and trust banks can issue yen-backed digital money-type stablecoins. This means every yen stablecoin in this category is tied to a supervised institution with capital, audits, and redemption obligations [Tokyo International Law Office].

• Full backing and redemption

Stablecoins must be fully backed by cash or equivalent assets (such as deposits or highly liquid instruments) and must guarantee redemption at par. This reduces depeg risk that has plagued some global stablecoins.

• Trust-bank model

When issued by trust banks, these stablecoins are structured as trust beneficiary rights, with all underlying assets held as bank deposits in Japan. This design is attractive to both domestic and foreign issuers who want to operate within Japan without building a full-stack local licensing footprint [Tokyo International Law Office].

Parallel to this, Japan’s regulator, the Financial Services Agency (FSA), has been explicit about its interest in using stablecoins to enable faster, lower-cost payments and to support Web3, DeFi, and tokenized securities. The FSA’s Payment Innovation Project, a regulatory sandbox, is already piloting yen-backed stablecoins from megabanks MUFG, SMBC, and Mizuho for blockchain-based payments and settlements.

In this context, the SBI–Startale stablecoin is not a speculative experiment; it’s another pillar in a maturing regulated digital asset ecosystem.

How the SBI–Startale Digital Yen Is Structured

Under the MoU:

• Issuer / redeemer:

The yen stablecoin will be issued and redeemed by Shinsei Trust & Banking, leveraging the trust-bank model Japan created for digital money-type stablecoins.

• Circulation and market access:

SBI VC Trade, a licensed crypto asset exchange and service provider, will handle stablecoin circulation, giving it a clear path into both retail and institutional markets.

• Regulated and programmable:

The token is being designed as a programmable, regulated digital yen, suitable for:

• Tokenized equities and bonds

• Real-world asset (RWA) flows

• Cross-border settlement

• Integration with Web3 infrastructure and smart contracts

Yoshitaka Kitao’s framing of the stablecoin as a “foundation for the token economy” signals that the project is aimed less at retail speculation and more at institutional-grade use cases: settlement layers for tokenized instruments, programmable finance, and compliant rails for DeFi-adjacent services.

Japan’s Broader Stablecoin Strategy: From Progmat to Multicurrency Models

The SBI–Startale initiative sits on top of a broader Japanese strategy to make the country a hub for regulated stablecoins and tokenized finance.

1. MUFG and the Progmat ecosystem

Japan’s largest bank, Mitsubishi UFJ Financial Group (MUFG), has been developing Progmat Coin, a stablecoin platform built around the same trust-bank model now used by many players in the market. Progmat stablecoins are fully backed by yen deposits held in trust and are intended for use cases such as securities settlement, RWAs, cross-chain payments, and DeFi integrations [Medium – DeSpread; Finance Magnates].

MUFG’s platform:

• Allows banks and corporations to issue stablecoins on public chains like Ethereum

• Leverages partners such as TOKI and Datachain for cross-chain interoperability

• Targets not just yen, but also foreign currency–denominated stablecoins, particularly USD [Finance Magnates]

This aligns closely with Japan’s legal framework, which explicitly allows stablecoins to be denominated in other fiat currencies as long as they follow the same issuance and backing rules.

2. SBI’s multicurrency approach: USDC and RLUSD

SBI is not betting solely on a single yen stablecoin. It has been steadily building a multicurrency stablecoin strategy:

• In 2024, SBI VC Trade integrated Circle’s USDC into its platform after Japan relaxed its rules on foreign-issued stablecoins. This made it one of the first regulated Japanese exchanges to support USDC trading, bringing compliant dollar liquidity into the local market [Tokyo International Law Office].

• In August 2025, Ripple announced plans to bring its RLUSD stablecoin to Japan in early 2026 through a partnership with SBI VC Trade, targeting institutional and enterprise use cases.

When combined with a trust-bank-issued yen stablecoin, this positions SBI as a key player in:

• FX-style on-chain settlement (JPY–USD)

• Liquidity routing between USDC, RLUSD, and digital yen

• Bridging between global stablecoin liquidity and Japan’s heavily regulated financial system

For DeFi protocols, this could mean new, compliant on- and off-ramps into Japan’s capital markets, and potentially more robust JPY liquidity on DEXs, lending markets, and RWA platforms that choose to integrate regulated rails.

Stablecoins, DeFi, and Tokenized RWAs: Why This Matters

For a DeFi or fintech audience, the significance of the SBI–Startale yen stablecoin lies less in the token itself and more in what it enables.

1. A compliant base layer for tokenized assets

Tokenized equities, bonds, funds, and real-world assets need a settlement asset that regulators and institutions are comfortable with. A trust-bank-issued yen stablecoin fits naturally as:

• Settlement currency for on-chain securities and RWA platforms

• Collateral for lending and margin in regulated or semi-permissioned DeFi environments

• A bridge asset between traditional infrastructure (custodians, CSDs, banks) and smart contracts

Because the asset is issued under Japan’s PSA framework with strict redemption and backing rules, it reduces legal and operational uncertainty for banks, brokers, and asset managers exploring tokenization.

2. Cross-border settlement and FX rails

Cross-border payments remain slow and costly in traditional banking infrastructure. A regulated digital yen paired with regulated dollar stablecoins (USDC, RLUSD, and others) could:

• Enable near–real-time JPY–USD settlement across different blockchains and venues

• Lower friction for cross-border trade, remittances, and B2B flows

• Provide a compliant alternative to shadow banking–style dollar exposure via offshore stablecoins

Japan’s willingness to treat these assets as digital money under a clear regulatory perimeter is a differentiator compared with jurisdictions where legal treatment of stablecoins remains ambiguous [Japan FSA – Regulatory Framework].

3. Safer rails after Terra and other failures

Global regulators were galvanized by the collapse of algorithmic stablecoins such as TerraUSD, which wiped out tens of billions in value. Japan’s framework explicitly focuses on:

• Fully backed, fiat-collateralized stablecoins

• Restricting issuers to supervised institutions

• Strong AML/CFT, disclosure, and user-protection rules for intermediaries [Tokyo International Law Office; PYMNTS]

For builders, this creates fertile ground for institutional DeFi and regulated fintech products that need predictable, legally recognized digital cash equivalents rather than experimental designs.

Key Concepts Explained

To align with the target audience but keep things clear, here are short, practical definitions of key terms referenced above:

• Stablecoin

A crypto asset designed to maintain a stable value relative to a reference asset, typically a fiat currency like the U.S. dollar or Japanese yen. In Japan’s framework, the focus is on fiat-backed, redeemable tokens, not algorithmic designs.

• Digital money–type stablecoin (Japan)

A legally defined class of stablecoins under Japan’s Payment Services Act that:

• Are pegged to fiat and redeemable at par

• Are issued only by licensed financial institutions

  • They are treated as Electronic Payment Instruments, closer to e-money than to unregulated crypto [Tokyo International Law Office].

• Trust-bank-issued stablecoin

A structure where a trust bank holds customer funds as deposits and issues tokens representing trust beneficiary rights. This design is central to platforms like Progmat and now to SBI–Startale’s yen stablecoin.

• Real-world assets (RWAs)

Off-chain assets like real estate, invoices, bonds, or funds that are tokenized and represented on a blockchain. Regulated stablecoins serve as natural settlement and collateral assets for RWA platforms.

• Token economy

An ecosystem where financial instruments, rights, and utilities are represented as tokens on distributed ledgers, enabling programmable transfers, composability, and more efficient settlement.

What to Watch Next

The SBI–Startale yen stablecoin is targeted for launch in Q2 2026, subject to regulatory approvals and finalization of compliance frameworks. Between now and then, a few developments will be particularly important for DeFi and fintech participants:

1. Technical architecture

• Which chains will the stablecoin support?

• Will it use public L1s (e.g., Ethereum) directly, permissioned networks, or a hybrid model?

• How will compliance (KYC/AML, travel rule, etc.) be enforced at the protocol and application layers?

2. Interoperability and programmability

• Integration with bridges, cross-chain messaging, and L2s

• Compatibility with existing DeFi primitives (AMMs, money markets, perps) in a compliant way

3. Integration with other regulated stablecoins

• How SBI orchestrates liquidity across digital yen, USDC, RLUSD, and potentially other regulated tokens

• Whether we see regulated JPY pairs emerging on both centralized and decentralized venues

4. Institutional adoption

• Uptake by Japanese banks, brokers, and asset managers

• Use in tokenized securities pilots, RWA platforms, and cross-border payment corridors

If Japan’s strategy works, the SBI–Startale stablecoin could become more than a local experiment. It could serve as a template for how regulated digital currencies, DeFi infrastructure, and traditional finance can be aligned under a coherent legal and technical framework.

Sidebar: Japan vs. EU MiCA vs. U.S. – How Stablecoin Regimes Compare

For readers thinking about jurisdictional risk, regulatory arbitrage, or where to launch compliant stablecoin products, it’s useful to compare Japan’s framework with the EU’s MiCA and emerging U.S. stablecoin proposals.

Japan: Stablecoins as “Digital Money” Under the Payment Services Act

Japan treats fiat-backed stablecoins as a form of electronic money, not as unregulated crypto:

• Legal category

  • “Digital money–type stablecoins” are defined as Electronic Payment Instruments under the Payment Services Act (PSA) [Tokyo International Law Office].

  • They must be pegged to legal tender (e.g., JPY) and redeemable at face value [PYMNTS].

• Who can issue

  • Only banks, funds transfer services, and trust banks.

  • Trust-bank-issued stablecoins are structured as trust beneficiary rights, with assets held as deposits in Japan.

• Core policy aim

  • Treat stablecoins as digital cash for payments and settlement, tightly integrated into the regulated banking system.

  • Support Web3, DeFi, and tokenization without compromising user protection or financial stability.

For builders, Japan offers high regulatory clarity and strong bank integration, but less room to “move fast and break things.” The trade-off: more compliance, more institutional comfort.

European Union (MiCA): A Harmonized but Layered Framework

The EU’s Markets in Crypto-Assets Regulation (MiCA) creates a unified regime for crypto-assets, with special treatment for stablecoins:

• Legal categories

  • Asset-Referenced Tokens (ARTs): backed by multiple assets (fiat, commodities, crypto).

  • E-Money Tokens (EMTs): pegged to a single fiat currency, closest to fiat-backed stablecoins.

• Who can issue

  • EMTs can be issued by credit institutions (banks) and e-money institutions.

  • ARTs require authorization as a crypto-asset service provider (CASP) plus specific ART obligations.

• Key obligations

  • White paper disclosure, capital and reserve requirements, governance and risk controls.

  • Stricter caps and scrutiny for “significant” stablecoins (e.g., high transaction volume or user base).

• Core policy aim

  • Create a single rulebook across 27 member states, reduce fragmentation, and protect consumers while allowing innovation.

Compared with Japan, MiCA is broader in scope (covering many crypto-asset types), but its stablecoin rules are conceptually similar: full backing, regulated issuers, enhanced oversight for systemic players.

United States: Fragmented but Converging Around Bank-Like Oversight

The United States does not yet have a single, enacted federal stablecoin law, but several proposals and regulatory positions point in a consistent direction:

• Regulatory patchwork

  • Stablecoins touch the Federal Reserve, Treasury, SEC, CFTC, and state regulators.

  • Issuers like Circle (USDC) typically operate under state money transmitter or similar licenses and FinCEN registration.

• Legislative proposals (high level)

  • Drafts such as the Clarity for Payment Stablecoins Act (and similar bills) tend to:

    • Require high-quality reserves, regular disclosure, and audits.

    • Put larger, systemic issuers under bank-like or specially chartered oversight.

    • Limit who can issue “payment stablecoins” (e.g., insured depository institutions or specially licensed entities).

• Policy focus

  • Emphasis on systemic risk, run risk, and payments infrastructure.

  • Continuing debate over whether stablecoins are closer to bank deposits, money market funds, or a distinct category.

From a builder’s perspective, the U.S. offers the deepest global liquidity and adoption but also the most regulatory uncertainty and enforcement risk, especially until a comprehensive federal stablecoin law passes.

High-Level Takeaways for DeFi and Fintech Builders

• Japan

  • Most conservative structurally: stablecoins as digital money issued by regulated financial institutions, with trust-bank models and clearly defined redemption obligations.

  • Attractive for institutional DeFi, tokenized securities, and RWA settlement where counterparties demand legal certainty.

• EU (MiCA)

  • Provides a harmonized, passportable regime across a large economic area.

  • Good fit for pan-European payment and fintech platforms wanting one consistent framework for euro and multi-asset stablecoins.

• U.S.

  • Largest market and liquidity hub, but still operating under fragmented rules and enforcement-driven guidance.

  • High upside for global stablecoin brands, but with a more complex risk profile until dedicated legislation is finalized.

For teams deciding where to launch or anchor a regulated stablecoin, RWA protocol, or institutional DeFi product, the combination of Japan’s bank-centric model, MiCA’s harmonized regime, and U.S. market depth forms a triangle of options—each with distinct strengths in compliance, market access, and product design.