Japan’s Financial Regulator Unveils Dual Measures for Crypto Innovation and Oversight

Japan’s Financial Services Agency (FSA) today unveiled two significant measures to advance the nation’s cryptocurrency sector.

The financial regulator is backing a stablecoin proof-of-concept with top banks. Meanwhile, proposals are being introduced for enhanced regulations on crypto lending and initial exchange offerings (IEOs).

Major Japanese Banks Unite for Stablecoin Trials

On November 7, the FSA introduced the Payment Innovation Project (PIP) as part of its FinTech Experimental Hub. The initiative brings together some of Japan’s leading financial institutions to jointly test the issuance of stablecoins within a regulated environment.

The participants include the Mizuho Bank, Mitsubishi UFJ Bank, Mitsubishi Corporation, Mitsubishi UFJ Trust and Banking Corporation, Sumitomo Mitsui Banking Corporation, and Progmat.

“Considering the growing domestic and international progress in exploring advanced payment systems using blockchain technology, the FSA launched the ‘Payment Innovation Project’ (PIP) — a sub-initiative within the FinTech Proof-of-Concept Hub specializing in the payment sector — on November 7, 2025,” the regulator wrote.

According to the FSA, the experiment will examine whether multiple banking groups can legally and efficiently issue electronic payment instruments using blockchain technology. The trial aims to verify compliance procedures, operational readiness, and regulatory compatibility.

“After the completion of the PoC, the FSA plans to publish the experiment’s results and conclusions on its official website. These will include key findings related to compliance and supervisory responses, as well as practical issues in legal interpretation that may arise when providing services to the general public,” the notice added.

This development follows the October 27 launch of Japan’s inaugural regulated yen-pegged stablecoin by JPYC Inc. The JPYC token operates under the Payment Services Act.

Japan Seeks To Tighten Crypto Lending and IEO Oversight

At the same time, the FSA convened a meeting to advocate for stricter oversight and close regulatory loopholes. According to local media reports, the proposals include bringing crypto lending services under the scope of the Financial Instruments and Exchange Act.

Operators would be required to establish risk management frameworks for relending and staking, ensure secure custody of assets, provide clear risk disclosures to customers, and comply with advertising regulations.

The move targets firms offering high-yield products—often promising returns of around 10% annually—with long lock-up periods, where users bear credit and price fluctuation risks without protections such as asset segregation or cold-wallet custody. Institutional transactions would remain exempt.

Regulators also discussed introducing investment caps for initial exchange offerings. This could prevent excessive fundraising for IEO issuers without financial audits.

The twin announcements on November 7 demonstrate Japan’s strategy in the digital asset arena. These steps foster blockchain innovation while strengthening investor protections.