TOKYO (Reuters) -Japan’s Financial Services Agency will support a project by the country’s three-largest banks to jointly issue stablecoins, Finance Minister Satsuki Katayama said on Friday, adding to momentum supporting digital payments in a country where cash and credit cards remain popular.
Katayama, who also oversees the FSA, made the comment in a news briefing after a regular cabinet meeting.
The banking arms of Japan’s three-largest financial groups – Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group – will jointly issue stablecoins which will be tested for use for cross-border payments, MUFG said in a release on Friday.
The FSA will assess whether the service can be carried out legally and appropriately, it said on Friday.
Last week, the world’s first stablecoin pegged to the yen was launched by startup JPYC, which backed the coins with domestic savings and Japanese government bonds.
Stablecoins have been strongly backed by U.S. President Donald Trump and interest has been growing globally, but some policymakers have expressed concern that they could facilitate the flow of funds outside regulated banking systems.
Stablecoins, because they are pegged to fiat currencies, typically avoid the volatility faced by cryptocurrencies, though there are concerns about whether issuers hold sufficient fiat or asset reserves to back the stablecoins that are in circulation.
(Reporting by Makiko Yamazaki and Anton Bridge; Writing by Leika Kihara; Editing by Chris Reese, Christian Schmollinger and Thomas Derpinghaus)
