Mega Bank Joint Stablecoin and Financial Instruments and Exchange Act Amendment — In 2026, Japan's financial sector will actively move into Web3

In 2026, Japan’s financial system is poised to undergo a major turning point. In addition to the joint stablecoin initiative announced by the three megabanks last November, the transition of cryptocurrency regulations to the Financial Instruments and Exchange Act (FIEA) is expected to lift restrictions on crypto asset businesses operated by bank subsidiaries.

Keio Iso, Executive Managing Director of Sumitomo Mitsui Financial Group, points out that “programability” will become the keyword in this new era of finance. From digitalization to Web3, and into the age of quantum computers—what does the future of banking and finance look like?

Background of the 3 Megabank Initiative—Risks of Losing “Currency Issuance Rights”

Why are the three megabanks now collaborating on a stablecoin project? The answer lies in the rapid global adoption of stablecoins.

The market capitalization of USD-denominated stablecoins has recently reached approximately 40 trillion yen, making them an indispensable part of Bitcoin trading. Not only institutional investors but also sovereign (government-related) funds worldwide are using stablecoins to purchase Bitcoin.

Iso expresses concern that, despite the growing domestic adoption of Bitcoin in Japan, there is no yen-based stablecoin. If USD-based stablecoins become widely circulated in Japan, there is a risk that Japan could lose part of its “currency issuance rights,” he warns.

The background of SMBC Group’s investigation into overseas cases and proof of concept (PoC) since 2020 reflects this long-term strategic thinking. With domestic legal reforms in 2024 and the enactment of the U.S. GENIUS Act in 2025, the joint initiative of the three megabanks has naturally gained momentum.

Connecting with Existing Financial Systems—“Scale” Benefits

The most distinctive feature of the three megabank joint initiative is its integration with existing financial infrastructure. If direct connections to the Zengin System and the Bank of Japan Net (BOJ Net) are realized, convenience will be greatly enhanced.

As a first step in proof-of-concept, a use case verification of cash management systems (CMS) is underway, targeting Mitsubishi Corporation. Global companies hold funds worldwide, but due to cutoff times in existing systems, they cannot transfer funds outside business hours. Enabling 24/7, efficient operations would dramatically improve corporate cash efficiency.

Iso states, “In the early days of cashless payments, many different payment systems proliferated. This time, we are designing a platform with unified conditions and standards from the start, ensuring interoperability and competition.” This design philosophy is based on the conviction that the moment blockchain-based decentralized finance (DeFi) connects with the existing financial system, it will create significant scale opportunities.

Relationship with JPYC—“Let’s Work Together” Policy

In October 2025, Japan’s yen-denominated stablecoin JPYC was issued. Regarding its positioning relative to the three megabank initiative, Iso clearly states:

“The advantage of the three megabank joint project lies in its connection to existing systems. While achieving direct connection of JPYC to BOJ Net and Zengin System is likely to be challenging, the three megabanks’ initiative does not cover small-scale payments.”

Currently, the “Kotora Remittance” operated jointly by major banks offers fee-free transfers up to 100,000 yen per transaction, but it is not directly connected to the Zengin System. Similarly, JPYC and the three megabank joint stablecoin could have a “role-sharing” relationship, according to Iso. His comment, “We tell JPYC ‘Let’s work together,’” suggests a mutually complementary relationship.

Expansion of Crypto Asset Business through FIEA Amendments

With the transition to the FIEA, bank subsidiaries will be able to conduct crypto asset operations (issuance, trading, brokerage), but specific business plans are still under development.

The formation and offering of crypto asset ETFs are under consideration, but issues related to brokerage and custody are being identified across the group. It is necessary to clarify differences from existing financial services, such as user protection, volatility risks, and system compatibility.

A particularly noteworthy point is the concept of “self-custody” in Web3. Traditional finance relies on protection by financial institutions, but Web3 emphasizes personal responsibility. Iso states, “We need to consider what to offer Japanese customers,” indicating a focus on developing Japan-specific approaches rather than simply adopting overseas models.

Tokenization and On-Chainization—Rebuilding the Financial System

Tokenization and on-chainization of assets are expected to bring significant changes to core banking areas such as payments, asset management, markets, and securities trading.

If low-cost, instant settlement, high-frequency trading, and cross-border transactions are simultaneously realized, transaction volumes could become “enormous.” As large-scale, 24/7 global settlements become commonplace, a leap in computational power will be essential.

The “quantum computer” Iso mentions is a key piece of this future. His assertion that “finance will become the primary use case for quantum computers” indicates that financial transactions of a scale unmanageable by current computing technology are anticipated.

Furthermore, the tokenization of RWA (real-world assets) will expand investment options horizontally and make interbank markets more efficient and faster. While the fundamental work of banks will change, it is crucial to recognize that this process involves multiple technological innovations—such as tokenization, high-speed communication networks (fiber optics), and AI—interacting with each other.

“Programability” in the Age of AI Agents—The Role of Banks in 2026

Iso highlights “programability” as a key concept for 2026. The fundamental advantage of blockchain—programability—will truly demonstrate its potential when combined with generative AI, quantum computing, and AI agent technologies.

If AI agents begin to handle transactions and asset management on behalf of humans, the need for individual app selection via smartphones will disappear, and everything will be automated through natural language instructions. Financial institutions will need to design “AI-Ready” services that differentiate themselves and appeal to users.

However, if all financial institutions adopt AI, functional differences will vanish. The winning condition at that point, Iso says, is “negative capability”—the ability to remain patient and continue thinking in uncertain situations without rushing to conclusions. The ability of humans to forecast the future three to five years ahead and to continue trial and error, rather than relying solely on past data indicated by AI, is what will determine the competitiveness of banks. This is not just a technical issue but a fundamental management philosophy.

100 Years Since the Invention of Electricity—Blockchain as Infrastructure

Iso draws an intriguing historical analogy. It took 100 years for electricity to expand from Edison’s invention of the light bulb to a wide range of applications. The development of foundational infrastructure such as power plants and transmission systems was essential for electricity to permeate society.

If blockchain is compared to the “invention of electricity,” the supporting infrastructure is gradually catching up. Unlike electricity, the pace of progress suggests that within five to ten years, the next stage could be reached. Multiple technological innovations—quantum computers, optical communication, AI—are beginning to serve as infrastructure to unlock blockchain’s full potential.

The roadmap that the megabanks will demonstrate in 2026 is not merely about technological follow-up but reflects a strategic stance of “thinking while swaying,” which could be the first step toward a fundamental reconstruction of the financial system.