Japan’s Stablecoin Landscape: Regulation, Innovation, and the Road Ahead (part1/2)

Stablecoins—a type of cryptocurrency pegged to fiat currencies like the US dollar, euro, or Japanese yen—have grown rapidly in global relevance. Now, they are playing a vital role in lowering transaction and remittance costs across borders.

This article looks back at the history of Japanese regulations surrounding cryptocurrencies and stablecoins, highlights recent domestic trends, and outlines future prospects.

(Stablecoins actually come in various forms, most notably those backed by fiat or other assets, and algorithmic ones with no collateral. Broadly stablecoins are categorized into collateralized and uncollateralized types. Here, we will exclusively discuss collateralized stablecoins.)

Stablecoin adoption

First, in the United States, stablecoin’s adoption has surged. Today, the combined market capitalization of leading USD-pegged stablecoins such as Tether (USDT) and Circle (USDC) lies between $235 billion and $265 billion. Behind this valuation lies a strong belief that stablecoins can dramatically streamline international payments. The GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act), which regulates stablecoins, was enacted in July 2025.

In Japan, awareness and ownership of crypto assets are steadily increasing, but stablecoins have yet to penetrate mainstream consumer payments. Still, Japan has taken a globally leading role in regulating digital assets. As early as 2017, Japan introduced legal definitions for crypto assets—becoming the first country in the world to do so.

Following a wave of contactless payment methods such as QR codes and mobile wallets, Japan reached a 42.8% cashless payment ratio in 2024, according to METI. Experts now anticipate that stablecoin-based payments could emerge as the next phase in this digital payment evolution.

Major developments and events related to cryptocurrencies and stablecoins in Japan

This table summarizes the major regulatory developments and events related to crypto assets and stablecoins in Japan in chronological order. The two laws, the Payment Services Act (PSA) and the Financial Instruments and Exchange Act (FIEA), represent Japan's approach to crypto assets and stablecoins, and have been revised repeatedly while keeping a close eye on global trends and taking into account the opinions of businesses and experts. So, to start, let's look at these two laws.

Payment Services Act (PSA, 資金決済法 in Japanese)

Enacted in 2009, the PSA regulates electronic money, prepaid instruments, and fund transfer services. Its 2017 revision was groundbreaking—it legally defined crypto assets for the first time in the world, giving Japan a leadership role in international regulatory debates.

In June 2023, the PSA was partially amended, and the first law regulating stablecoins (more precisely, "electronic payment instruments") came into effect.

Financial Instruments and Exchange Act (FIEA, 金融商品取引法 in Japanese)

Enacted in 2007, the FIEA consolidates previous laws on securities and derivatives, enabling cross-product regulation of stocks, bonds, and investment funds. While most crypto assets fall outside its scope, certain investment-like tokens—such as security tokens or crypto derivatives—are covered.

The 2020 amendment to FIEA clarified that security tokens issued via blockchain (so-called “digitally recorded transfer rights”) are regulated as securities. This triggered the rise of security token platforms like Progmat, a Mitsubishi UFJ Financial Group (MUFG) spinout focused on token issuance infrastructure.

In Part 2, we will delve deeper into the current state of stablecoins in Japan, including Japan's first stablecoin, regulatory developments over the past few years, and a PoC of stablecoin touch payments in collaboration with a region of approximately 800 people.

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