The June 2023 Payment Services Act amendments channel yen-pegged stablecoin issuance through three named routes: banks, fund-transfer service providers (FTSP), and trust companies. All three are live in production. The interesting part for an operator is not that Japan licensed stablecoins (most major jurisdictions have done that since), but that it built three structurally different perimeters under a single statute, each producing a different instrument with different reserve mechanics, redemption profiles, and credit exposures for the holder. JPYC under the FTSP route, Progmat-format products under the trust route, and bank-direct issuance are not three flavours of the same thing. They are three different instruments wearing the same word.

Why three routes

The PSA amendments pre-date almost every other tokenisation-era stablecoin framework in production. MiCA Title IV (EMTs) reached the EU statute book later, the Hong Kong Stablecoins Ordinance commenced in August 2025, GENIUS settled the US federal perimeter in 2024-25, and Korea is still working through its Phase 2 Digital Asset Basic Act. Japan got there first, in part because the Japanese authorities had been cleaning up the perimeter around the prepaid-instrument and money-transfer regimes since the 2020 Banking Act and PSA revisions. By 2023 they had three regulated entity types already supervising activity adjacent to stablecoin issuance, and the political path of least resistance was to extend each to a stablecoin issuance permission rather than create a new licence type from scratch.

The structural consequence is that each route inherits the supervisory perimeter of its parent licence. A bank-issued yen stablecoin is a banking product first, supervised by the FSA Japan under the Banking Act, with the issuance permission attached. An FTSP-issued stablecoin sits inside the fund-transfer service regime, capped historically at JPY 1 million per transaction and with a redemption logic shaped by money-transfer mechanics. A trust-issued stablecoin uses the trust beneficiary interest as the on-chain instrument, with the trust company as fiduciary holding the reserve as trust property. Three different legal animals, three different ways of breaking under stress.

Route 1: bank-direct issuance

A bank that wants to issue a yen stablecoin under the PSA route does so as part of its banking activity. The reserves are part of the bank's own balance sheet, the holder's claim is on the bank, and what the holder is exposed to is single-name credit risk on that bank, the same exposure as a current account, except instrumented as a transferable token rather than a deposit balance.

In practice this route has been slower to ship in production despite being legally available. The reasons are operational. A bank issuing a stablecoin is taking on token-issuance plumbing on top of its existing payment rails, which means new accounting, new reconciliation against the on-chain ledger, new AML/CFT touchpoints for token transfers, and new compliance for sanctions screening on bearer-style movement. None of this is hard, but a megabank has bigger projects competing for the same risk-and-control budget, and the trust route has produced workable outputs faster.

The supervisory touchpoint is the FSA Japan under the Banking Act, which means the same prudential supervision the bank already faces, with the stablecoin programme as a supervised line of business inside it. There is no separate stablecoin licence on top of the banking licence. The bank simply issues under its existing perimeter.

For a holder, the credit exposure is to the issuing bank. If the bank fails, the holder is in the queue with other depositors and creditors, with the deposit insurance regime applying to the extent the stablecoin is treated as a deposit-equivalent claim. The legal characterisation of bank-issued stablecoins as deposits versus payment instruments has not been definitively tested in stress, which is one reason the trust route has proved easier for institutional consortia to ship around.

Route 2: FTSP issuance

The fund-transfer service provider route is the path JPYC chose. JPYC was registered as an FTSP by the FSA Japan on 18 August 2025 and launched the first FSA-approved yen stablecoin under the new regime on 27 October 2025. As of late 2025, JPYC's reserve composition is cash deposits and Japanese government bonds, with the proportions disclosed at the issuer level rather than fixed by statute.

An FTSP is structurally a non-bank licensed for fund transfers, with the historical perimeter shaped by the JPY 1 million per-transaction cap and a redemption logic that treats the user balance as a custodial liability rather than a deposit. Under the PSA stablecoin amendments, an FTSP can issue a token whose unit-of-account is a yen claim on the FTSP, with reserves segregated from the FTSP's own balance sheet but still sitting at the issuer rather than at a third-party trust.

What the holder is exposed to in stress is therefore the FTSP's own balance sheet, mediated by the segregation rules. If the FTSP fails, the segregated reserves are intended to be available to fund redemptions, but the holder's claim is to the segregated pool rather than to a fiduciary structure. The structural protection is weaker than the trust route and stronger than an unsecured bank deposit only because of segregation.

Distribution and on-chain transferability under the FTSP route are constrained by the underlying FTSP licence. JPYC currently distributes through a combination of direct issuance, regulated exchange listings, and selected on-ramp partnerships. On-chain, the token is bearer-style transferable subject to issuer-level allow/blocklist controls, similar to USDC under GENIUS or HKD-pegged stablecoins under the Hong Kong Ordinance.

Route 3: trust issuance

The trust route is the one most institutional Japanese consortia have used in production. A trust company holds the underlying reserve as trust property, and the on-chain instrument is the beneficial interest in that trust. Progmat is the worked example: a megabank consortium led by MUFG, with Mizuho, SMBC, and other participants, that has shipped trust-issued stablecoin and tokenised-asset products since 2023.

Mechanically, the trust takes deposits or cash equivalents from the issuer, holds them as trust property under a trust agreement supervised by the FSA Japan, and issues beneficial interests that are transferred on-chain. The holder of the on-chain token is a beneficiary of the trust. What the holder is exposed to is the trust beneficiary interest, which under Japanese trust law is bankruptcy-remote from the trust company itself: if the trust company fails, the trust property is not part of the trust company's estate. Credit exposure is to the underlying reserve assets, not to the trust company as a corporate entity.

That bankruptcy-remoteness is the structural feature that has made the trust route the preferred path for institutional consortia. A megabank consortium issuing through a trust is not adding the consortium's credit risk to the instrument. The instrument is collateralised by the trust property, fiduciarily held, and the consortium's role is operational rather than balance-sheet.

Distribution under the trust route runs through the consortium's distribution channels, which in Progmat's case includes the megabank participants and their wholesale and retail customer bases. On-chain transferability is constrained by the beneficiary-tracking requirements of Japanese trust law, which the consortium implements through permissioned-transfer logic at the token contract level. The token is not bearer-style transferable in the way a payment stablecoin under MiCA EMT or GENIUS is. It is closer to a tokenised fund interest, with permissioned transfer and registered holders, even though near par the chart shape is identical to a payment stablecoin.

Comparison with other regimes

Set against MiCA, Hong Kong, GENIUS, and the MAS Single-Currency Stablecoin framework, the Japanese three-route structure looks more granular. MiCA produced a single EMT category for fiat-pegged single-currency tokens, with the issuer choice limited to credit institutions or authorised electronic money institutions. The Hong Kong Stablecoins Ordinance specifies a single licensing perimeter for fiat-referenced stablecoins, with banks and non-banks both eligible to apply for the same licence. GENIUS routes US payment stablecoin issuers through a permitted-issuer perimeter that admits insured depository institution subsidiaries, federally qualified non-banks, and state-qualified issuers below a threshold. The MAS SCS framework restricts issuance to Major Payment Institutions under the Payment Services Act, with bank-grade reserve and capital layers added.

Japan is the only major regime that explicitly preserves three separate legal vehicles inside the same statute. The practical effect is that a counterparty looking at "a yen stablecoin" needs to know which route it came through to know what they are holding. That is a discipline operators need to develop when integrating Japanese stablecoin flows into their treasury or settlement workflows, in a way they do not need to develop for USDC or for an HKD-pegged Ordinance-licensed token.

The granularity also has implications for cross-border use. An FTSP-issued JPYC moving into a non-Japanese counterparty's wallet creates a different set of regulatory questions than a trust-issued Progmat-format token moving into the same wallet. Counterparty banks running Japanese-yen tokenised flows will, over time, need to discriminate between the three routes when sizing exposure and routing redemptions.

Open questions

• Reserve composition disclosure cadence is not statute-fixed across all three routes. JPYC's disclosures are at the issuer level; the trust-issued products disclose to beneficiaries on the cadence specified in the trust agreement.
• Whether bank-direct issuance will accelerate now that JPYC and Progmat have shipped, or whether megabanks will continue to default to the trust route for institutional consortia.
• The agentic-commerce perimeter under the three routes. Trust-issued tokens with permissioned transfer are structurally awkward for an AI agent counterparty that does not have a registered beneficial-interest record. FTSP-issued JPYC is closer to bearer-style and easier for an agent to hold and spend, subject to issuer-level controls.

Related

• japan.
• FSA Japan.
• Stablecoin types for the cross-jurisdictional stablecoin taxonomy.
• japan progmat architecture for the trust route in detail.
• japan jpyc ftsp route for the FTSP route in detail.
• hong kong for the Hong Kong Stablecoins Ordinance comparison.