Japan's Stablecoin Strategy: A Financial Landscape Rewritten by 2026 — The Future Vision Painted by Sumitomo Mitsui Banking Corporation

In 2026, Japan’s financial system is approaching a major turning point. The joint stablecoin initiative by the three megabanks, the regulatory transition to the Financial Instruments and Exchange Act, and the advent of the quantum computer era. As these elements intertwine, the very role of banks is being questioned.

Why are the three megabanks rushing into stablecoins now?

The joint stablecoin project announced in November last year by the three megabanks is a symbolic decision for Japan’s financial industry. The underlying reason is Japan’s sense of crisis in the global market.

The market capitalization of dollar-denominated stablecoins has already reached approximately ¥40 trillion and has become an essential part of Bitcoin trading. It has evolved into a financial infrastructure used daily by institutional investors, including sovereign (government-related funds). Meanwhile, in Japan, the issuance of stablecoins has lagged, and many companies and individuals continue to rely on foreign-issued stablecoins.

The financial strategy division under the SMBC Group emphasizes the “risk of losing monetary issuance rights.” There is a shared understanding that without a Japanese-issued stablecoin, part of Japan’s financial sovereignty could be effectively lost.

The reality of the joint initiative—From PoC to implementation

The plan by the three megabanks begins with pilot experiments targeting companies like Mitsubishi Corporation. A representative use case is the Cash Management System (CMS).

Global corporations have a demand to manage funds stored around the world in a consolidated manner to achieve efficient operations 24/7/365. Traditionally, operational hours (cut-off times) limit nighttime activities, causing funds that cannot be operated overnight. Stablecoins can free them from this constraint.

While the implementation timeline is not yet clear, the domestic legal framework in 2024 and the enactment of the US GENIUS Act in 2025 are favorable developments. The Financial Services Agency (FSA) is also concerned about US developments and is taking the lead in industry coordination.

Connecting with existing systems is a key point

What sets the joint stablecoin of the three megabanks apart from existing JPYC is its integration with Japan’s financial infrastructure. If direct connections to the Zengin System and the Bank of Japan Net are realized, scalability will dramatically improve.

Currently, JPYC has a issuance cap of ¥1 million and is specialized for small transactions. In contrast, the three megabank plan focuses on wholesale (inter-company transactions) and aims to integrate with existing payment systems. The two are complementary, and coexistence—like “Kotorra Transfer”—is also envisioned.

However, providing personal wallets is not included in the current plan. Ensuring interoperability is important, but the priority as a business model differs.

The transition to the Financial Instruments and Exchange Act opens new horizons for crypto asset businesses

With the scheduled transition to the Financial Instruments and Exchange Act in 2025, bank subsidiaries will be allowed to issue, sell, and broker crypto assets. This is a very important milestone in Japan’s financial regulation history.

While specific business developments are still in exploration, the formation and offering of crypto asset ETFs are recognized as unavoidable options. Discussions are also ongoing within groups regarding brokerage and custodial services.

Emerging challenges include user protection, volatility management, and system infrastructure development. The principle of self-custody wallet management and individual responsibility must be harmonized with Japanese financial practices. Instead of uncritically importing overseas models, designing services tailored to Japan’s customer base is essential.

Adding crypto asset menus to Olive is also under consideration, but timing and implementation methods are still being discussed.

Tokenization and on-chainization will fundamentally change banking

Asset tokenization and on-chainization have the power to fundamentally reshape banking operations in three areas: payments, asset management, and market/securities trading.

If payments become low-cost, instant, high-frequency, and cross-border, transaction volumes will grow beyond current expectations. When DvP (Delivery versus Payment) settlements—simultaneous transfer of assets and funds—become routine 24/7/365, processing capacity will reach levels unmanageable by traditional systems.

The role of quantum computers is particularly noteworthy here. Finance is expected to be the first killer use case for quantum computing. The dramatic improvements in power and computing capacity will enable full-scale on-chain finance.

As RWA (Real World Assets) are increasingly tokenized, investment options will expand horizontally, and interbank markets will become faster and more efficient. The role of banks will change significantly, shifting from mere intermediaries to strategic technology companies.

However, the timeline for these changes depends on multiple technological innovations. It is necessary for not only blockchain but also advancements in communication networks (such as optical communication), AI development, and other infrastructure to progress in parallel.

The keywords for 2026—“Programmability” and “Negative Capability”

Two keywords are emerging when considering the future of finance.

The first is “programmability.” The inherent advantages of blockchain are rapidly becoming more tangible in the era of generative AI and quantum computers. A world where AI agents manage assets on behalf of humans is already technically feasible.

The second is “Negative Capability”—the ability to continue thinking without rushing to conclusions in environments of high uncertainty. As AI becomes widespread and differentiation becomes difficult, human creativity and foresight will become increasingly important.

The conditions for banks to be chosen by customers will involve “AI-Ready” service design and human capital capable of envisioning the future 3 to 5 years ahead. No matter what technological innovations occur, the act of “thinking while swaying” will define the existence of financial institutions.

The transformation of the banking image—what it will look like in 10 years

Ten years ago, bank counters were a world of slips and stamps. Today, stores integrated with Starbucks and digital-first platforms like Olive are mainstream.

What about ten years from now? AI will handle transactions, smartphones will have evolved beyond their current form, and a world will emerge where everything is completed by requesting AI agents through natural language. In this scenario, redefining the role of banks will be essential for their survival.

While dependence on AI and cloud infrastructure will increase, security and data sovereignty management will remain non-negotiable challenges. Combining on-premises and cloud environments appropriately and utilizing new technologies like MCP (Model Context Protocol) will open pathways to protect data sovereignty while benefiting from the latest technologies.

Japan’s stablecoin strategy, crypto asset operations under the Financial Instruments and Exchange Act, and preparations for the quantum computer era are not just about technology adoption—they are a redefinition of finance itself. 2026 will be the year when this transformation accelerates.