Japan FSA Backs Stablecoin Trade-Settlement Pilot With Mizuho, MUFG and SMBC

Japan’s Financial Services Agency is backing a pilot project to test the use of stablecoins for settling funds in trade transactions.

The agency said on Sept. 29 that participants include TradeWaltz, NTT Data, Mizuho Bank, Mitsubishi UFJ Bank, Sumitomo Mitsui Banking Corp. and Mitsubishi UFJ Trust and Banking Corp.

The project marks the fourth case supported under the Payment Innovation Project, or PIP, a payments-focused program within the regulator’s FinTech Proof-of-Concept Hub. It is the 15th supported project under the broader FinTech Proof-of-Concept Hub.

Participants will verify whether stablecoins can be used for fund settlement in the course of trade transactions. They will also review actual business procedures and operating methods, while sorting through related legal issues.

The pilot began this month and will continue for the time being. After the test concludes, the FSA plans to release the results, including issues identified in regulatory compliance and supervisory responses, as well as questions over legal interpretation that could arise if the service is offered to the general public.

Japan’s FSA launched the PIP in November last year to support payments innovation using blockchain technology. Through the latest project, it plans to more closely examine the feasibility of using stablecoins for trade settlement and the related regulatory framework.