Thoughts on the Market – How Japan’s Stablecoin Could Reshape Global Finance

Host: Miya Nagasaka, Head of Japan Financials Research, Morgan Stanley MUFG Securities
Date: October 31, 2025

Episode Overview

This episode explores the imminent introduction of Japan’s first yen-denominated stablecoin, delving into its regulatory foundations, potential impact on both domestic and international financial systems, and broader implications for investors. Miya Nagasaka discusses how Japan’s distinct approach may drive digital finance transformation and reshape global payment dynamics.

Key Discussion Points & Insights

1. Japan’s Stablecoin Revolution

• Japan and Global Crypto Timing

  • Japan is joining the stablecoin market later than other countries but with a carefully crafted framework.
  • The upcoming launch of a yen-backed stablecoin is attracting global attention, with the potential to become a major player like Tether.
    • "Japan may be late to the crypto market, but its first yen denominated stablecoin is just around the corner, and it has the potential to quietly reshape how digital money moves across the country and globally." (B, 00:21)

• What Are Stablecoins?

  • Digital currencies pegged to assets (yen, dollar, cash, bonds, even gold) to avoid high volatility seen in cryptocurrencies like Bitcoin.
  • Designed for stability, managed by private companies, and fully backed by reserves.

2. Regulatory Environment: Japan’s Approach

• Legal Framework
  • As of June 2023, the Payment Service Acts provides a clear framework for stablecoins.
    • "Japan amended its Payment Service Acts to create a legal framework for stablecoins market." (A, 00:55)
  • Strict requirements:
    • Must be 100% backed by high-quality liquid assets
    • Algorithmic stablecoins are banned
    • Transparency, reserve requirements, and monthly audits are mandated
    • Alignment with regulations seen in the US, EU, and Hong Kong

3. Potential Impact and Use Cases

• Accelerating Cashless Payments

  • Growing adoption: Japan’s cashless payment ratio rose from 30% (2020) to 43% (2024), still trailing leading markets.
  • Government support for fintech and digital payments as part of economic transformation.
  • Stablecoins seen as a “missing link” toward a fully digital economy.
    • "The government's push for fintech and digital payment is accelerating, and stablecoins could be the missing link to a truly digital economy." (B, 01:14)

• Fast, Reliable Settlements

  • Enables instant payments, asset management, and real-time settlement of securities; transactions that took days can now occur in seconds.
    • "Real time settlement of stock and bonds trades normally take days. These transactions could happen in seconds with stablecoins." (B, 02:15)

• Business Innovation

  • Supports new models: ‘Banking as a service,’ Web3, and more.
  • Regulatory costs and low interest rates remain challenges for profit margins.

• International Payments and SWIFT

  • Stablecoins won’t replace SWIFT, but can provide supplemental, much faster and cheaper cross-border settlements (up to 80% lower fees).
    • "Payment that used to take days can now be completed in seconds with up to 80% lower fees." (B, 03:10)
  • Compliance and trust in issuers are essential, especially regarding anti-money laundering controls.

4. CBDCs vs. Stablecoins

• Similarities and Differences

  • CBDCs: Issued by central banks, considered legal tender, function as public infrastructure.

  • Stablecoins: Privately issued, serve as innovation drivers.

  • Japan is cautiously exploring a CBDC, but no commitment to launch yet.

    • "Both stablecoins and CBDCs are digital, but digital currencies are issued by central banks and considered legal tender, whereas stablecoins are private sector innovations." (B, 03:40)

  • In the future, stablecoins and CBDCs could coexist, serving complementary roles.

5. The Global Implications

• Japan as a Fintech Leader
  • World’s fourth largest economy with leadership in technology, but deliberate in financial reform.
  • Japan’s stablecoin could launch a ripple effect through payments, asset management, and global financial infrastructure.
    • "Japan's stablecoin journey is just the beginning, but its impact could ripple across payments, asset management and even global finance." (B, 04:20)

Notable Quotes & Memorable Moments

• On Japan’s Opportunity:

  • "Japan may be late to the crypto market, but its first yen denominated stablecoin is just around the corner, and it has the potential to quietly reshape how digital money moves across the country and globally." (B, 00:21)

• On Regulatory Rigor:

  • "Japan's regulatory approach is strictly stablecoins must be 100% backed by high quality liquid assets, and algorithmic stablecoins are prohibited…monthly audits are standard." (B, 01:50)

• On Transformation Potential:

  • "Stablecoins could be the missing link to a truly digital economy." (B, 01:22)
  • "These transactions could happen in seconds with stablecoins." (B, 02:15)
  • "Payment that used to take days can now be completed in seconds with up to 80% lower fees." (B, 03:10)
  • "If and when that happens, stablecoins and CBDCs can coexist with the digital currency, serving as public infrastructure and stablecoins driving innovation." (B, 03:55)

Important Timestamps

• 00:21: Japan’s stablecoin entry and global context
• 00:55: Legal framework established in June 2023
• 01:14: Cashless payment growth and government’s fintech push
• 02:15: Real-time settlement potential
• 03:10: Stablecoins’ impact on SWIFT and cross-border payments
• 03:40: Comparison between CBDCs and stablecoins
• 04:20: Broader implications for global finance

Conclusion

The episode outlines how Japan’s new yen-backed stablecoin, built on robust regulatory foundations, has both national and global significance. With continued fintech momentum, Japan could set a new standard in digital payments—offering speed, reliability, and innovation—while influencing broader global financial transformation.