Japan Megabanks Pilot Fiat-Backed Stablecoins for Corporate Payments

Japan's three largest banking groups are preparing to issue fiat-backed stablecoins for corporate use, launching pilots that aim to speed up domestic and cross-border settlements and to integrate tokenized payments into regulated banking systems. Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group plan to roll out a yen-pegged token for business-to-business transactions first, with a U.S. dollar-pegged version likely to follow, people involved in the initiatives said.

The banks intend to back each token one-to-one with deposits held as collateral, a structure designed to preserve parity with the underlying currency and limit volatility commonly associated with cryptocurrencies. Mitsubishi Corporation is expected to be the initial corporate user during pilot tests, which will focus on streamlining large-scale enterprise payments. If those trials succeed, the platform could be extended to the tens of thousands of corporate clients served by the three megabanks, with proponents noting a potential reach of more than 300,000 enterprises connected across their networks.

Technically, the stablecoins will be built on blockchain infrastructure that...