Japan: Stablecoin Regime

Stablecoin Regime

Japan's stablecoin regime is settled, in force, and actively being extended to foreign issuers under clear equivalence criteria. Domestic yen-pegged electronic-payment-instrument stablecoin issuance is restricted to banks, trust companies, and registered funds-transfer service providers under the Payment Services Act's electronic-payment-instrument framework. A revised FSA Cabinet Office Ordinance recognising foreign trust-type stablecoins as electronic payment instruments took effect 1 June 2026, opening a cross-border equivalence pathway that has already been used: RLUSD cleared this equivalence standard.

On the domestic issuance side, JPYSC, issued via SBI Shinsei Trust Bank, gives holders a direct legal claim under trust law to underlying yen held in segregated trust accounts, illustrating the redemption-right structure that trust-bank-issued yen stablecoins carry under this framework. This trust-law redemption structure is distinct from, and generally considered more robust than, a simple contractual redemption promise, since it gives holders a proprietary claim on segregated assets.

Stablecoins remain classified separately from the general crypto-asset reclassification occurring under the FIEA amendment, continuing under the Payment Services Act's electronic-payment-instrument treatment rather than moving toward securities-style oversight.

Outlook

Watch for additional foreign stablecoin issuers pursuing the equivalence pathway following RLUSD's approval, and for any divergence in regulatory treatment between domestically-issued trust-bank stablecoins and foreign-equivalence stablecoins as the market develops.

Stablecoin Regime

Japan's stablecoin regime moved decisively in a liberalising direction this cycle. On 24 August 2026 the FSA removed the JPY 1 million per-transaction cap that had previously constrained second-category funds-transfer stablecoin providers, and simultaneously launched a dedicated Cryptocurrency and Stablecoin Division comprising three specialised offices. This is a probable-confidence, T3-sourced finding and represents the most significant operational liberalisation of Japan's stablecoin framework since JPYC's launch. The underlying legal classification is unaffected by this liberalisation: fiat-referenced stablecoins remain classified under the PSA as electronic payment instruments, confirmed and in force since 2023, issuable only by banks, trust companies, or registered funds-transfer service providers.

JPYC, operating under the funds-transfer-service-provider track of that framework, obtained its registration and launched Japan's first FSA-recognised yen-pegged stablecoin in October 2025 — a confirmed, in-force development that predates but sets up this cycle's cap-removal liberalisation. A separate and structurally distinct issuance track is also in motion: JPYSC, a trust-bank-issued yen stablecoin backed by SBI Holdings and Startale Group, is reported to be targeting a launch under the trust-company issuer track, which carries no daily-transaction cap at all, unlike the funds-transfer track JPYC uses. This JPYSC finding is held at Uncertain confidence and T4 source-tier; whether JPYSC has actually completed licensing as of this cycle's cutoff was not independently confirmed.

The combination of the funds-transfer-track cap removal and the uncapped trust-company track illustrates that Japan now offers two structurally different regulatory pathways to yen-stablecoin issuance, with materially different transaction-limit profiles, both operating under the same underlying EPI legal classification.

Outlook

Watch for independent confirmation of JPYSC's licensing status under the trust-company issuer track, and for how the newly launched Cryptocurrency and Stablecoin Division's three specialised offices divide supervisory responsibility between the funds-transfer and trust-company stablecoin issuance tracks going forward.

Stablecoin Regime

Japan's stablecoin framework is the most operationally mature and actively liberalising part of the crypto regime this cycle. Fiat-pegged, par-redeemable stablecoins are regulated as Electronic Payment Instruments under the Payment Services Act, a settled classification distinct from general crypto assets. JPYC Inc. became the first issuer to operate under this framework at scale, obtaining an FSA funds-transfer-service-provider licence in August 2025 and launching Japan's first fully regulated yen-pegged EPI in October 2025 -- giving the regime a live, operating example rather than a purely theoretical structure. Two further developments extend the framework this cycle. First, trust-type EPI issuers may now hold up to 50% of backing reserves in short-term Japanese government bonds of three months or less, or in early-cancellable term deposits, under the amended PSA -- a relaxation from a narrower cash-and-deposit-only composition requirement that gives issuers more yield-bearing flexibility while retaining short-duration, liquid instruments. Second, a Cabinet Office Ordinance effective 1 June 2026 opened a foreign-stablecoin equivalence pathway: qualifying foreign trust-type stablecoins may be recognised as EPIs where their home jurisdiction maintains equivalent regulation and information-sharing arrangements with Japan, opening a route for non-domestic issuers to reach the yen market without building a standalone domestic trust structure from scratch.

Outlook

The stablecoin track looks likely to keep extending rather than tightening. The foreign-equivalence pathway is the mechanism most worth watching going forward, since its use would determine whether the yen stablecoin market remains effectively a single-issuer (JPYC) market or opens to recognised foreign issuers under equivalence arrangements. The reserve-composition relaxation should also be monitored for how it interacts with broader safeguarding and settlement-risk expectations relevant to payments-adjacent oversight, particularly as issuers diversify away from pure cash holdings into short-dated government paper.