USD and yen-backed tokens compete for market share as Japan tests stablecoin waters

Japan’s stablecoin market is heating up, with a number of new partnerships forming around the country’s first yen-backed stablecoin. Banks and major businesses are now piloting both yen- and dollar-backed stablecoins for real world payments.

But a clear split is taking shape. While USD stablecoins dominate global transactions, yen-backed coins are being positioned as a low-cost, homegrown option for domestic commerce and business settlements.

A dollar-yen divide

At a souvenir shop in Tokyo’s Haneda Airport, travelers can now pay with USD stablecoins. The trial, led by Japanese fintech firm Netstars, runs through mid-February.

She told Cryptopolitan that USD stablecoins made the most sense for the airport, given their widespread use among international travelers.

Currently, 90% of stablecoin circulation is tied to USD, and the vast majority of these transactions take place outside the United States.

“The pilot at Haneda Airport is just the first step in demonstrating a use case, and based on the results of this pilot, we hope to expand usage across more locations and payment methods,” said Saori Okuyama of Netstars.

Okuyama said the decision to trial physical payments reflects the company’s belief that more merchants are needed for stablecoin payments to take off.

“The challenge for stablecoins is not technology, but building places where people actually use them,” said Okuyama.

JPYC eyes mass adoption

JPYC, Japan’s first licensed stablecoin issuer, is pushing its yen-backed tokens into mainstream finance through business collaboration.

The startup signed a memorandum of understanding (MOU) with Line on January 20 to explore integrating its stablecoin into a LINE-based wallet for everyday payment in an effort to expand its consumer reach.

JPYC is also targeting corporate adoption. On February 4, it announced a capital and business alliance with software company, Asteria Corporation, to connect the yen stablecoin to accounting and payment software, enabling companies to experiment with digital payments without changing internal systems.

JYPC was awarded Japan’s first stablecoin license in August 2025 following amendments to the Payment Services Act in 2023. Since officially launching its yen stablecoin in October, JPYC celebrated the milestone of issuing more than one billion yen ($6.3 million) in tokens.

“Using JPYC inside LINE could be a turning point for stablecoin adoption in Japan. Rewards and everyday payments, in particular, could create a representative use case for yen stablecoins,” said Noritaka Okabe, CEO of JPYC.

Okabe believes stablecoins will only expand in the future as AI agents start making purchases on behalf of individuals.

The end of bank profitability

Taku Kikushige of NTT Data Institute of Management Consulting doesn’t foresee yen stablecoins taking over bank deposits or being the preferred corporate payment option.

Instead, the more serious issue is the thinning of banks’ points of contact with customers following the “externalization” of payments. On January 16, he said banks, especially regional banks as well as credit unions, will need to rethink their existing business model in order to survive.

“As stablecoin payments become embedded in business processes, bank accounts will no longer function as the starting point or the heart of settlement. They will be a temporary transit point for funds.”

Kikushige warns that the shift to digital payments won’t drain bank deposits overnight. He said banks might not see which customers are most likely to move their money until it’s already gone.

Big banks want a slice of the stablecoin pie

In 2026, Japan’s megabanks are determined to play a role in the future payment infrastructure. The flurry of stablecoin initiatives by banks stem from an understanding that bank-centric B2B and cross-border payment infrastructure will no longer be the most efficient.

In November last year, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corporation (SMBC), and Mizuho Bank said they were planning to jointly issue a yen-denominated stablecoin, followed by a USD-backed stablecoin.

The joint stablecoin project is still at the proof-of-concept stage, and the collaboration hasn’t been finalized. Yet, Akio Isowa, Chief Digital Innovation Officer at SMBC, said their aim from the outset has been to avoid the fragmentation that plagued Japan’s introduction of cashless payments.

“We don’t want a chaotic proliferation of incompatible systems like in the early days of cashless payments,” said Isowa. “From the outset, we wanted a platform with common conditions and standards, ensuring interoperability, where companies compete at the application layer.”

Japan’s fifth-largest commercial bank, Resona and Japanese credit card company JCB, are also moving to introduce stablecoin-based payments into the retail sector. They aim to put the system into practical use by 2027 after conducting a pilot program at selected JCB-affiliated shops.

Resona and JCB say they are promoting stablecoins to retailers as a way to cut transaction fees. But beneath the pitch is an existential investigation into whether blockchain settlement can outperform card networks without sidelining banks.

USD stablecoins already own the field

Japan’s push into yen-backed stablecoins is colliding with a market already dominated by USD stablecoins.

Financial Agency Services officials have warned that if Japan does not take stablecoins seriously, other currencies will fill the gap. SMBC’s Akio Isowa relayed a similar concern in that Japan can not risk delaying the rollout of yen-backed stablecoins.

“USD stablecoins have already become the de facto standard in crypto trading. If the development of yen stablecoins is delayed, their presence could be hollowed out within digital payment infrastructure,” said Isao.

Scaling is the solution

For banks and fintech, the best solution is to rapidly scale yen-backed stablecoins for wholesale and corporate use.

Isowa said one advantage banks have is interoperability with on and off ramps, thanks to the extensive interbank settlement and domestic transfer system that private issuers like JPYC don’t have access to.

Yet, Isao said he is eager to work together and sees no reason JPYC and the megabank stablecoin project can’t coexist.

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