- SMBG plans to launch a fiat-backed stablecoin on the Avalanche network to improve payments.
- Ava Labs and Fireblocks will handle blockchain infrastructure and token management.
- Japan’s stablecoin regulations set it as a global leader in digital finance innovation.
Sumitomo Mitsui Financial Group (SMBC), one of Japan’s largest financial institutions, has revealed plans to launch a fiat-backed stablecoin on the Avalanche blockchain network. The project aims to transform cross-border payments by reducing the reliance on traditional intermediaries like the SWIFT network. This collaboration with Ava Labs and Fireblocks marks a major step toward blockchain adoption in traditional finance.
Project Timeline and Trials
The stablecoin project, still in its early planning phase, is set to begin trials in late 2025. Initially, these trials will focus on intercompany payments and testing the coin’s functionality within SMBG’s internal operations. A full launch is anticipated in 2026, expanding the stablecoin’s reach to broader financial markets.
The stablecoin will be powered by the blockchain operated by the US-based Ava Labs. Token issuance is to be taken under blockchain infrastructure firm Fireblocks, along with security and management tasks. During the testing phase, TIS, a Japanese IT firm, will be involved in the technical implementation of the platform so as to make sure that it functions properly.
Japan’s Stablecoin Regulation
Japan can be considered the global leader in terms of regulating stablecoins. In 2022, the country enacted legislation categorizing fiat-backed stablecoins as “Electronic Payment Instruments.” This law limits the creation of stablecoins to licensed banks and other financial institutions. Japan is also exploring additional amendments to cover a broad range of digital assets more effectively.
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The total market size of stablecoins is experiencing rapid growth and is currently at $234.6 billion, which is a 56% increase year on year. This has brought about competition from financial institutions all over the world, with top organizations such as Bank of America considering adopting stablecoin projects. Nonetheless, the most important aspect of their decision-making process is regulatory certainty.
If successful, this could place Japan on the map as one of the leading economies whose institutions have issued stablecoins. It would also shed light on the increasing convergence between the blockchain industry and traditional banking systems. This signals a new direction for the international financial market.
