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The Current State of Japan's Stablecoins — The World's First Jurisdiction for Stablecoin Legislation

Stablecoin Field — Stablecoin Stories Around the World #5 | Japan

I. Macro Policy: Japan's Specialized Stablecoin Legislation and Three-Tier Regulatory Framework

Japan became the world's first jurisdiction to enact dedicated stablecoin legislation. The revised Payment Services Act was passed by the National Diet in June 2022 and took effect in June 2023, defining stablecoins as electronic payment instruments and distinguishing them legally from cryptocurrencies like Bitcoin.

Regulatory Positions during Legislative Deliberations (Based on FSA documents and Financial Council meeting records, objectively paraphrased)

Regulators focused on mitigating run risks, reserve mismanagement, and smart contract vulnerabilities. They framed stablecoins as a complement to, rather than a replacement for, existing payment systems. Under licensed oversight and with strict safeguards for user funds, regulators selectively encourage stablecoins for their potential to boost settlement efficiency.

Four core provisions of the legislation:

While Japan is a pioneer in stablecoin legislation, its commercial adoption lags behind economies like the United States and Singapore. Japan launched consultations on stablecoin regulation back in 2019, and the Terra stablecoin collapse in 2022 accelerated the legislative timetable. The revised Payment Services Act cleared the Diet in June 2022, making Japan the first country globally to implement dedicated stablecoin rules. According to official documents from Japan's Financial Services Agency (FSA), the primary legislative goals are to mitigate risks such as stablecoin runs and reserve embezzlement, protect user assets, and accommodate blockchain payment innovation while maintaining strict safety guardrails. Regulators recognize stablecoins' potential to raise settlement efficiency yet classify them as electronic payment instruments subject to conventional financial supervision.

Although countering the dominance of US-denominated stablecoins was not cited as an official legislative objective, analyses by multiple financial media outlets and domestic institutions note that US stablecoins dominated nearly all on-chain settlement markets at the time. By establishing a compliant framework early, Japan successfully reserved room for domestic yen stablecoins, preventing the long-term monopolization of regional digital settlement tracks by US stablecoins. Japan also aimed to strengthen its voice in setting global stablecoin regulatory standards through this pioneering regime. This provides a valuable blueprint for other advanced economies. Historically, high regulatory barriers, a limited pool of authorized issuers, and a prolonged low-interest-rate environment dampened issuer incentives to promote adoption; however, recent rate hikes in Japan are expected to improve this outlook.

II. Industry Landscape: Tokenized Asset Integration, Agent Payment Exploration, Japan-US Stablecoin Comparison, Enterprise B2B Rollout, and Domestic Stablecoin Growth

2.1 Tokenization and Stablecoin Integration

Japan's stablecoin and tokenized asset initiatives remain at the testnet proof-of-concept (PoC) stage and are not commercially live, currently utilizing the trust-based stablecoin JPYSC as the settlement backbone. SBI, DigiFT, and Startale completed a PoC on testnets, enabling instant settlement for tokenized fund subscriptions and automated on-chain dividend disbursements via JPYSC.

Conceptually, stablecoins serve as the settlement currency for tokenized securities, funds, and other RWA (Real World Assets). However, regulators impose clear constraints: complex programmable logic remains confined to isolated test environments, and the large-scale deployment of autonomous execution contracts on mainnets is not currently permitted. Regulators prioritize stablecoin redemption safety and fear payout shocks stemming from smart contract flaws. Automated cash flow and redemption functions for tokenized assets are restricted to small-scale pilots and cannot yet be deployed at scale.

Core regulatory stance: Stablecoins settle tokenized assets, but the complex conditional programmability of the underlying assets is treated with extreme caution.

2.2 Agent Payment Development in Japan

Japan has no dedicated legislation for AI agent payments, a field still in the frontier research phase. Agent payments leverage stablecoins' programmable funds, enabling AI agents to execute transactions automatically under predefined rules. Relevant trials in Japan are confined to conceptual and small-scale testing, with no public commercial launch. Regulators permit simple machine-to-machine payments provided fund flows remain within licensed financial institutional frameworks. They maintain high caution regarding permissionless AI agents autonomously managing programmable stablecoin funds. In contrast, the United States has already delivered engineering deployments for the X402 protocol and agent wallets; Japan's progress largely remains at the policy discussion stage, with few practical applications.

2.3 Japan-US Stablecoin Comparison (Regulation and Use Cases)

Regulatory Framework

Use Cases

Domestic Yen Stablecoin Growth: JPYC and JPYSC

Access to Overseas Stablecoins

Starting in March 2025, Japanese users gained access to USDC via SBI VC Trade, marking it as the primary compliant offshore stablecoin available locally.

B2B Logistics Use Case: Alleviating Cash Flow Pressures for Subcontractors

The logistics sector has emerged as the most prominent B2B use case for stablecoin settlements.

III. Consumer-Facing Segment: Offline Retail and Cross-Border Payments for Visitors

C2B Retail Payments: From Airport Pilots to Direct POS Integration

Stablecoin retail payments have evolved from closed small-scale trials to point-of-sale (POS) QR code settlements.

Deployment roadmap: Airport/pop-up pilots → POS barcode payments → Nationwide QR network
(Haneda Airport T3 / Shibuya Pangea Café) | (Lawson POS integration) | (Binance Pay + PayPay)

Pilot milestones:

Landmark Lawson Convenience Store POS Pilot:

Industry perspectives and roadmap:

At an industry forum on October 1, Taro Tamura of Lawson commented that processing direct stablecoin transactions through existing POS systems marks a first in Japan. Convenience stores represent the most promising channel for JPYC to enter everyday retail payments. Current technical optimizations aim to achieve transaction speeds comparable to domestic e-money services like au PAY.

Risuke Shimizu confirmed that data interfaces between POS registers and the blockchain payment layer are now aligned, and refund workflows have been fully designed. Hiroshi Yoshida, Chairman of HashPort, outlined the next phase: inbound tourists will be able to choose between credit cards and stablecoins at checkout.

Cross-Border Payments for Inbound Tourists: Nationwide QR Network Activated

On September 30, 2026, stablecoin retail payments expanded further for visitors.

IV. Summary and Outlook

Japan is the world's first country to introduce dedicated stablecoin legislation, yet its commercial adoption trails behind the United States, Singapore, and other economies.

Key limiting factors:

Future trajectory: Japan will not relax its stablecoin rules aggressively. The core approach is to layer stablecoin capabilities on top of established traditional financial infrastructure. B2B corporate settlement (specifically logistics subcontractor payments) will be prioritized for scaling. On the retail side, by leveraging convenience store POS systems and PayPay QR networks, services will initially cater to inbound tourist cross-border payments. In the near term, tokenized assets and AI agent payments will remain confined to testnet PoC validations, reflecting persistent regulatory caution regarding programmable funds and open smart contracts, where redemption security remains the absolute priority.

From small-scale trials at Haneda Airport to live POS deployments at Lawson; from 2,300 logistics subcontractors to millions of PayPay offline merchants, Japan's stablecoin ecosystem is steadily penetrating the real economy by leveraging mature checkout, POS, and QR payment infrastructure. Merchants maintain yen-based accounting, while enterprises and consumers benefit from faster fund turnover and lower cross-border payment friction. With the validation of key pilots wrapping up by late 2026, Japan's stablecoin market is transitioning from feasibility testing to full-scale commercial operations.

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