Issuing a Stablecoin in Japan: Trust, Bank, or Fund Transfer?

Introduction

In August 2025 a yen stablecoin issuer registered as a fund transfer service provider. In June 2026 a trust bank issued what its group describes as Japan's first trust-type yen stablecoin. A second exchange was registered to distribute USDC in August 2026, and the Financial Services Agency (FSA) set up a division dedicated to crypto-assets and stablecoins the same month.

Coins already issued abroad follow a separate route from the three issuer types. An overseas company planning a coin for Japan has to decide early whether it will issue the coin itself or have a Japanese financial institution issue it.

Stablecoins remain under the Payment Services Act (資金決済法, Shikin Kessai-hō). The amendment promulgated on 23 July 2026 moves crypto-assets under the Financial Instruments and Exchange Act, which the FSA's outline describes as a category separate from securities, and leaves stablecoins under the Payment Services Act. See our earlier piece on the FIEA migration for that side of the reform.

The short answer

If each transfer needs to exceed JPY 1 million, the trust route is the practical option. Your company can take part as the settlor, with a Japanese trust bank or trust company acting as the issuer.
If transfers of JPY 1 million or less are acceptable and you want to be the issuer yourself, register as a Type II fund transfer service provider.
The bank route issues the coin as a bank deposit and requires a Japanese banking licence. It is realistic only for banks.
A coin already issued abroad does not need a Japanese issuer licence. It reaches Japanese users through a registered distributor, subject to additional conditions.

The three routes at a glance

	Fund transfer	Trust	Bank
Who issues	Registered fund transfer service provider	Trust bank or trust company	Licensed bank
Legal basis	Payment Services Act, Art. 2(5)(i) and Art. 37	Payment Services Act, Art. 2(5)(iii), 2(9) and 37-2	Banking Act (銀行法, Ginkō-hō), Art. 4
Cap per transfer	JPY 1 million (Type II)	None	Not subject to the fund transfer caps
How users are protected	Security deposit, or a substitute guarantee or trust contract	Trust assets, at least 50% in demand deposits	Deposit insurance
What the issuer needs	Registration as a fund transfer service provider	Authorisation, licence or registration for trust business in Japan	A banking licence under the Banking Act

Route 1: Fund transfer

A registered fund transfer service provider can issue a stablecoin that represents a claim on its outstanding obligations to users. JPYC took this route. It registered on 18 August 2025 and announced that it would begin issuing on 27 October 2025.

Most providers operate as Type II, which limits each transfer to JPY 1 million (Payment Services Act Enforcement Order, Art. 12-2(1)). That cap is enough for retail payments and remittance but not for treasury or settlement between companies.

The provider must secure what it owes users by making a security deposit, which the Act allows it to replace with a guarantee contract or a trust contract (Arts. 43 to 45). It must be a kabushiki kaisha, or a foreign fund transfer provider authorised under equivalent foreign law that has an office in Japan and a representative resident in Japan (Art. 40(1)).

Route 2: Trust

In the trust route, the stablecoin is a beneficial interest in a money trust, called a specified trust beneficial interest (Art. 2(9)). The issuer is the trust bank or trust company that acts as trustee. A trust company that qualifies as a specified trust company (Art. 2(30), which excludes trust banks) can operate by filing a notification, rather than registering as a fund transfer provider, provided it is not disqualified under Article 40(1)(vii) or (viii). When a holder asks during the trust period for the trust principal to be repaid, such a trust company must meet the request without delay by partly cancelling the trust, unless a Cabinet Office Order exception applies (Art. 37-2(4)).

There is no cap per transfer, which is why this route suits large payments. JPYSC, which the companies behind it describe as the first trust-type yen coin in Japan, was issued on 24 June 2026 by a trust bank. A registered exchange in the same group acts as settlor and handles distribution. Japan's three megabanks have announced a trust-type coin in which they act jointly as settlors, with a trust bank or similar institution as trustee, aiming for live transactions within fiscal year 2026.

A 2025 amendment to the Payment Services Act took effect on 1 June 2026 and relaxed the reserve rules. For a yen coin, at least 50% of the trust assets must be held in demand deposits. The rest may be held in Japanese government bonds maturing within three months, or in time deposits of the permitted kinds that can be cancelled at any time without loss of principal. A coin in a foreign currency follows the same pattern in that currency, with qualifying short-dated bonds in that currency. Where part of the trust assets is held in bonds, the trust contract must provide that the trustee values the assets at market, and that the settlor makes up any shortfall against what is owed to holders within two business days from the day after it arises (Cabinet Office Order on Electronic Payment Instruments Service Providers, Art. 3).

In the two examples above, a trust institution acts as trustee and issuer, and a distributor or banks take the settlor's role. Acting as settlor is not itself carrying on trust business. If the trust holds bonds, the settlor carries the top-up duty above. If you will also deal with users yourself, you may need a separate registration.

Route 3: Bank deposit

A licensed bank can issue a stablecoin in the form of a deposit. The FSA has explained that such coins are protected by deposit insurance in the same way as ordinary deposits.

The route depends on a banking licence under the Banking Act (Art. 4(1)). In April 2026 the FSA's FinTech PoC Hub decided to support a pilot in which customers of different banks send each other tokenised deposits, and the banks settle between themselves either through deposit accounts or with stablecoins.

Already issued abroad?

USDC and other coins issued abroad reach Japanese users through a registered Electronic Payment Instruments Service Provider (Art. 62-3). As of 27 August 2026, two providers were registered, and both handle USDC (FSA register).

The distributor must not handle a foreign stablecoin unless all three of the following are met (Cabinet Office Order on Electronic Payment Instruments Service Providers, Art. 30(1)(v)):

The issuer holds a licence or registration, or has made a filing, under equivalent foreign law, and is supervised by an authority that can share information with the FSA
The redemption assets are managed under equivalent foreign law and audited by a certified public accountant or audit firm in the issuing country
The issuer is required to take measures, such as suspending transactions, when crime is suspected

When it does handle one, the distributor must also take two measures (Art. 30(1)(vi)):

Commit to buy back the coins it holds for users (only those in Japan, if it can tell them apart from users abroad) at their redemption amount if the issuer has difficulty paying or the coin loses significant value, and protect the assets needed to do so (or take an equivalent measure)
Keep the amount it holds and transfers for each user, other than other service providers, at the same level as for Type II fund transfer coins, which cap each transfer at JPY 1 million

How to choose

How large must a single transfer be? Anything above JPY 1 million per transfer rules out Type II fund transfer coins, and foreign coins held for ordinary users in Japan. Type I fund transfer business has no amount cap but comes with its own restrictions (Art. 51-2).
Will you set up in Japan? The fund transfer route needs a kabushiki kaisha, or a foreign provider authorised at home with an office and a resident representative in Japan (see Route 1). The trust route needs an issuer qualified for trust business in Japan instead: a trust bank, or a trust company, including a licensed foreign trust company.
Who will carry redemption? In the fund transfer route it is you. In the trust route it is the trustee, and if the trust holds bonds, the settlor must also cover any shortfall. For a foreign coin, the Japanese distributor must also commit to a buy-back or take an equivalent protective measure.
Where will the coin circulate? Issuing the coin and distributing it are regulated separately. A party other than the issuer that sells, holds or brokers the coin for users as a business generally needs its own registration.

When to talk to a lawyer

Bring in Japanese counsel at the design stage, well before any filing.

Whether you plan to issue a new coin or distribute one issued abroad, expect to consult the regulator early too. Japanese authorities generally prefer to discuss a new business before the formal application, and points settled with them in advance do not have to be argued over after filing. The FSA runs a FinTech Support Desk, which accepts a wide range of enquiries from companies already running FinTech businesses or planning to start one.

References

Payment Services Act (Act No. 59 of 2009), Japanese text on e-Gov. Relevant provisions: Articles 2, 36-2, 37, 37-2, 40, 43, 44, 45, 51-2 and 62-3. The official English translation predates the stablecoin rules.
Act No. 66 of 2025 amending the Payment Services Act, in force from 1 June 2026 (FSA, Japanese).
Payment Services Act Enforcement Order, Article 12-2.
Cabinet Office Order on Electronic Payment Instruments Service Providers, Articles 3 and 30.
FSA, Regulatory Framework for Crypto-assets and Stablecoins.
FSA, register of Electronic Payment Instruments Service Providers (as of 27 August 2026).
Press releases by JPYC, the SBI group and the three megabanks (2025 to 2026, Japanese).

This article is for general information only and is not legal advice.

If you are weighing these routes for a Japanese launch, you can reach us here.