Japan fast-tracks stablecoin finance, eyes cross-border edge
The gist
Japan is turbocharging its digital finance future by tokenizing $1.3 billion in assets with yen stablecoins, slashing crypto taxes, and pioneering next-gen cross-border payments.
What to know
- SBI, Startale Group, and DigiFT are using yen-pegged stablecoin JPYSC to tokenize a $1.3B equity fund, backed by Japan’s streamlined banking and new 20% crypto tax rate.
- Japan’s Financial Services Agency has launched a dedicated digital assets division, pushing integration of tokenized and programmable finance into mainstream markets and boosting institutional adoption.
- The Musubi Project, a Japan-South Korea partnership, is rolling out a blockchain-based, dollar-free payment rail that settles trades in real time and slashes settlement risk for cross-border payments.
Japan’s Tokenization Surge
Major Japanese banks and fintechs are leveraging new tax incentives and regulatory clarity to embed stablecoin-backed tokenized assets—including equities, bonds, and deposits—deep into the nation’s financial system, fueling a multi-billion dollar digital capital market.
Japan is rapidly advancing the tokenization of its equity and real-world assets through yen-pegged stablecoins such as JPYSC and JPYC, with major financial institutions like SBI Group, Startale Group, DigiFT, and Ondo Finance spearheading initiatives including the tokenization of a $1.3 billion equity fund. This momentum is bolstered by government-level support that has streamlined banking infrastructure, adoption models, and distribution frameworks, alongside favorable tax reforms that have reduced capital gains tax on crypto from around 50% to approximately 20%, creating a fertile environment for digital capital markets.
Japan’s proactive and coordinated regulatory approach, exemplified by the Financial Services Agency’s creation of a dedicated division for digital assets and stablecoins, is positioning the country as a global leader in blockchain-enabled financial markets. This framework not only integrates tokenized assets and programmable financial instruments into the traditional financial system without punitive measures but also encourages institutional flows and cross-border interoperability, potentially establishing Japan as a key hub for digital capital markets alongside major jurisdictions like the US.
Beyond equities, Japanese financial institutions are actively launching tokenization projects involving bonds, deposits, and digital securities, supported by yen stablecoins developed by government-linked banks. This broad adoption signals a strategic push to embed tokenized assets deeply within Japan’s financial ecosystem, leveraging stablecoins not only for payments and collateral but also to innovate traditional financial strategies such as the on-chain yen carry trade, which is expected to scale issuance into the billions in the coming years.
Musubi’s Real-Time Payment Revolution
The Musubi Project’s blockchain-powered, dollar-free settlement rail eliminates FX settlement risk and costly intermediaries, enabling atomic, real-time cross-border payments between Japan and South Korea for a broader range of institutions.
The Musubi Project, a joint venture between Japan's SBI Digital Practice and South Korea’s NodeInfra announced in August 2026, is pioneering a dollar-free, atomic payment-versus-payment (PvP) cross-border payment rail between Japan and South Korea. By leveraging stablecoins and blockchain technology, specifically the Canton Network’s two-phase commit protocol coordinated by a Global Synchronizer, Musubi ensures simultaneous settlement of both legs of a transaction, effectively eliminating Herstatt risk—a settlement risk that exposes over $1.4 trillion daily in FX markets. This innovation transforms the traditional sequential payment process into a single cryptographic event, enhancing trade settlement efficiency and reducing systemic risk in one of Asia’s busiest trade corridors.
Musubi’s atomic PvP architecture marks a significant departure from existing solutions like CLS, which settle netted batches and exclude many mid-tier institutional players due to membership thresholds. By settling each transaction atomically and simultaneously, Musubi fosters greater inclusivity for the Japan-Korea corporate corridor, addressing a longstanding gap where only 36% of daily FX settlement is fully protected against settlement risk. This shift not only streamlines cross-border payments but also democratizes access to risk-mitigated settlement mechanisms for a broader range of market participants.
Central to Musubi’s value proposition is its elimination of the traditional US dollar detour in cross-border payments, where the South Korean won is first converted to dollars and routed through correspondent banks before conversion to Japanese yen. This conventional process introduces delays, inefficiencies, and heightened settlement risk. By removing reliance on the US dollar and correspondent banking intermediaries, Musubi’s stablecoin-based rail accelerates real-time settlement, reduces costs, and mitigates risks, thereby enhancing the overall efficiency and resilience of trade settlements between Japan and South Korea.