Three of Japan’s largest banks said they will jointly issue a stablecoin this financial year, which ends in March.
Mitsubishi UFJ Financial Group (MUFG), Sumitomo Mitsui Financial Group (SMBC) and Mizuho Financial Group will establish a council to explore operational frameworks and prepare for the issuance of stablecoins, according to a statement on MUFG’s website.
The three banks will act as “joint settlors and a trust bank or similar institution will act as trustee,” the statement said.
Japan’s Financial Services Agency (FSA) signaled support for the development of a stablecoin by the three banks last November. More recently, the ruling Liberal Democratic Party (LDP) said the state should promote the usage of yen-based stablecoins.
Stablecoins are digital tokens pegged to the value of a traditional financial asset, usually a fiat currency. The market is overwhelmingly dominated by U.S. dollar tokens, with Tether’s USDT and Circle Internet’s (CRCL) USDC alone accounting for a combined 84% market share.
Tokens pegged to the yen represent a negligible share of the market, accounting for less than $50 million in the $311 billion sector. The most prominent is JPYC with a market cap of around $18 million, issued by a Tokyo-based fintech of the same name.