Original Release Date: October 31, 2025
Our Japan Financials Analyst Mia Nagasaka discusses how the
country’s new stablecoin regulations and digital payments are set
to transform the flow of money not only locally, but globally.
Read more insights from Morgan Stanley.
----- Transcript -----
Welcome to Thoughts on the Market. I’m Mia Nagasaka, Head of
Japan Financials Research at Morgan Stanley MUFG
Securities.
Today – Japan’s stablecoin revolution and why it matters to
global investors.
It’s Friday, October 31st, at 4pm in Tokyo.
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.
You may have heard of digital money like Bitcoin. It’s
significantly more volatile than traditional financial assets
like stocks and bonds. Stablecoins are different. They are
digital currencies designed to maintain a stable value by being
pegged to assets such as the yen or U.S. dollar.
And in June 2023, Japan amended its Payment Services Acts to
create a legal framework for stablecoins. Market
participants in Japan and abroad are watching closely whether the
JPY stablecoin can establish itself as a major global digital
currency, such as Tether.
Stablecoins promise to make payments faster, cheaper, and
available 24/7. Japan’s cashless payment ratio jumped from about
30 percent in 2020 to 43 percent in 2024, and there’s still room
to grow compared to other countries. The government’s push for
fintech and digital payments is accelerating, and stablecoins
could be the missing link to a truly digital economy.
Unlike Bitcoin or other cryptocurrencies, stablecoins are
designed to suppress price volatility. They’re managed by private
companies and backed by assets—think cash, government bonds, or
even commodities like gold. Industry watchers
think stablecoins can make digital payments as reliable as
cash, but with the speed and flexibility of the internet.
Japan’s regulatory approach is strict: stablecoins must be 100
percent backed by high-quality, liquid assets, and algorithmic
stablecoins are prohibited. Issuers must meet transparency and
reserve requirements, and monthly audits are standard. This is
similar to new rules in the U.S., EU, and Hong Kong.
What does this mean in practice? Financial institutions are
exploring stablecoins for instant payments, asset management, and
lending. For example, real-time settlement of stock and bond
trades normally take days. These transactions could happen in
seconds with stablecoins. They also enable new business models
like Banking-as-a-Service and Web3 integration, although
regulatory costs and low interest rates remain hurdles for
profitability.
Or think about SWIFT transactions, the backbone of international
payments. Stablecoins will not replace SWIFT, but they can
supplement it. Payments that used to take days can now be
completed in seconds, with up to 80 percent lower fees. But trust
in issuers and compliance with anti-money laundering rules are
critical.
There’s another topic on top of investors’ minds. CBDCs – Central
Bank Digital
Currencies. Both stablecoins
and CBDCs are digital. But digital currencies are issued by
central banks and considered legal tender, whereas stablecoins
are private-sector innovations.
Japan is the world’s fourth-largest economy and considered a
leader in technology. But it takes a cautious approach to
financial transformation. It is preparing for a CBDC but hasn’t
committed to launching one yet. If and when that happens,
stablecoins and CBDCs can coexist, with the digital currency
serving as public infrastructure and stablecoins driving
innovation.
So, what’s the bottom line? Japan’s stablecoin journey is just
beginning, but its impact could ripple across payments, asset
management, and even global finance.
Thanks for listening. If you enjoy the show, please leave us a
review wherever you listen and share Thoughts on the Market with
a friend or colleague today.
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