On April 3, 2026, Japan's Financial Services Agency (FSA) announced its support for a new proof-of-concept experiment under the Payment Innovation Project (PIP), a specialized initiative within its FinTech Proof-of-Concept Hub. This marks the third project under PIP and the fourteenth overall in the hub's history.

Three companies are leading the experiment: DeCurret DCP, the company behind Japan's digital currency infrastructure known as "DCJPY"; GMO Aozora Net Bank, recognized for its advanced use of banking APIs; and ABeam Consulting, which brings extensive financial IT consulting experience. According to the three companies, several additional financial institutions are also expected to participate.

The experiment tests the interbank settlement mechanism needed when customers at different banks transfer tokenized deposits to one another. The aim is to complete that settlement leg on-chain and put every transaction through real-time gross settlement, 24 hours a day, 365 days a year, which would cut settlement risk, the liquidity banks must hold, and back-office workload. Testing began in April 2026 and will continue for the foreseeable future.

Two Settlement Approaches Under the Microscope

What makes this experiment particularly noteworthy is that it compares two fundamentally different approaches to interbank settlement side by side.

The first approach uses deposit accounts held between banks, essentially rebuilding the traditional correspondent banking model on-chain. One private bank acts as the lead bank, and the user-to-user transfer and the interbank leg settle at the same moment. The second approach uses stablecoins, digital assets pegged to fiat currency, as the settlement medium.

The FSA will evaluate the practical suitability of each method while simultaneously working through unresolved legal questions. Under Japan's current framework, the application of the Payment Services Act and Banking Act to tokenized deposit settlements remains partially unclear, and financial institutions need legal certainty before they can scale these services commercially.

Understanding DCJPY: Japan's Digital Currency Ecosystem

At the heart of this experiment is DeCurret DCP's DCJPY platform, which tokenizes bank deposits on a blockchain. Think of it as "programmable bank deposits": money that can be automatically moved, split, or triggered by smart contracts while remaining fully backed by actual bank deposits and covered by Japan's deposit insurance.

Over 100 companies and organizations participate in the Digital Currency Forum that DeCurret DCP operates, including Japan's three mega-banks (MUFG, SMBC, and Mizuho), telecom giants NTT and KDDI, and transportation company JR East. Commercial services already launched in July 2024, when GMO Aozora Net Bank began issuing DCJPY for environmental value certificate trading.

In September 2025, Japan Post Bank, Japan's largest bank by deposits, said it was considering offering tokenized deposits through DeCurret DCP's platform, targeting a launch in fiscal year 2026. Major securities firms SBI Securities and Daiwa Securities are also testing DCJPY-based DVP (delivery versus payment) settlement for security tokens, rapidly expanding the ecosystem.

Why Interbank Settlement Matters

Japan's current interbank transfer system, the Zengin System, is reliable but has limitations, including restricted operating hours and fees.

If tokenized deposits or stablecoin-based settlement proves viable, smart contracts could enable real-time, 24/7 settlement, dramatically reducing costs and processing times for both businesses and individuals. For Japan's corporations facing an acute labor shortage, automating invoice-to-payment workflows could be transformative.

Global Comparison: Where Japan Stands

United States: The GENIUS Act Creates a Stablecoin Framework

The US enacted the GENIUS Act (Guiding and Establishing National Innovation for US Stablecoins Act) in July 2025, the first federal law to regulate stablecoins comprehensively. It requires stablecoin issuers to maintain 1:1 fiat currency backing, guarantee redemption rights, and comply with anti-money laundering regulations.

The Office of the Comptroller of the Currency (OCC) began proposing implementation rules in March 2026, with the law set to take full effect by January 2027 at the latest. The Treasury Department also began its first rulemaking in April 2026 to establish principles for state-level regulatory regimes. The Trump administration has positioned the US as aspiring to become the "crypto capital of the world," using regulatory clarity to encourage private-sector innovation.

EU: MiCA Leads with Comprehensive Regulation

The EU's Markets in Crypto-Assets Regulation (MiCA) became fully applicable at the end of December 2024, establishing the world's first comprehensive regulatory framework for digital assets. It requires stablecoin issuers to publish white papers, maintain strict reserve requirements, and obtain authorization. July 1, 2026 is the outside end of the transition period for crypto-asset service providers to secure licenses or cease operations.

While MiCA provides regulatory certainty, it also includes protective measures such as transaction caps on non-euro stablecoins (1 million daily transactions or €200 million in payment value), which critics say could limit innovation and push issuers to more flexible jurisdictions.

Japan: A Pragmatic "Coexistence Model"

Japan's approach stands out for its pragmatism. Rather than choosing between stablecoins and bank-issued digital currencies, Japan is testing both. The revised Payment Services Act provides a licensing framework for stablecoin issuers, while tokenized deposits like DCJPY operate under existing banking regulations. The result is a coexistence model.

Ruling-party policy groups are also pushing the rulemaking for stablecoins and tokenized deposits. If the current experiment clarifies the legal questions, it opens the way for commercial deployment of tokenized deposit services across Japan's banking sector.

The Digital Yen (CBDC) Question

The Bank of Japan has been conducting phased CBDC experiments since 2021, and pilot testing with private-sector participation began in April 2023. However, the BOJ maintains that it has no current plan to issue a digital yen.

That gap is where private-sector solutions like tokenized deposits and stablecoins come in. Rather than waiting for a government-issued digital currency, Japan is building on-chain financial plumbing through the private sector, with regulatory backing from the FSA.

What This Means for Japan's Financial Future

The FinTech Proof-of-Concept Hub was established by the FSA in 2017 to help companies navigate regulatory uncertainty around innovative experiments. PIP, launched within the hub in November 2025, focuses specifically on blockchain-based payment innovation. Projects are selected based on five criteria: clarity, social significance, innovativeness, consumer protection, and execution feasibility.

Japan's approach lacks the headlines of Trump's crypto embrace or the sweep of MiCA. What it has is a method: settle the legal ground, then open the door. Where Japan ends up in the global digital currency race depends on how many of these unglamorous experiments stack up.

How far along is your country in digitalizing banking or adopting stablecoins? We'd love to hear your perspective!

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