Japanese TradFi giant Sumitomo Mitsui Financial Group announces plans to launch a fiat-backed stablecoin

The project, currently in the planning phase, aims to modernize cross-border payments by reducing reliance on traditional intermediaries

Japanese financial giant Sumitomo Mitsui Financial Group (SMFG) is planning to launch a fiat-backed stablecoin on the Avalanche network in collaboration with US-based Ava Labs and blockchain infrastructure firm Fireblocks.

The project, currently in the planning stages, will focus on modernizing cross-border payments by reducing reliance on traditional intermediaries like the SWIFT network, local media reported.

Initial trials will be limited to intercompany payments and are scheduled for the second half of 2025, paving the way for a full-scale launch next year.

Ava Labs will spearhead the blockchain development for the stablecoin infrastructure, while Fireblocks will handle token issuance, security, and management systems. Japanese IT firm TIS will provide technical support during the experimental phase.

SMFG, the parent company of Japan’s second-largest bank, Sumitomo Mitsui Banking Corporation (SMBC), manages approximately $1.7 trillion in assets. The lender has gradually increased its involvement in blockchain over the past several years. In 2022, the bank co-launched Token Business Lab with HashPort to explore enterprise use cases for NFTs, including experiments with non-transferable identity tokens.

In 2023, SMBC joined Japan’s other banking giants — Mitsubishi UFJ and Mizuho — in a pilot focused on stablecoin applications for international settlement.

Japan’s stablecoin policy is among the most advanced globally. Legislation passed in 2022 formally classified fiat-backed stablecoins as “Electronic Payment Instruments,” restricting issuance to regulated banks and licensed financial entities.

Regulators are now considering further reforms that would bring digital assets like Bitcoin and ether fully under securities law, introducing protections against insider trading.

Globally, traditional finance institutions are signaling a growing interest in stablecoin adoption, with several major financial institutions considering launching their own stablecoins.

In the US, regulatory momentum is building, with recent calls from President Donald Trump for legal clarity on dollar-pegged tokens. Bank of America has also expressed interest in entering the stablecoin market, contingent on regulatory approval.

The stablecoin sector has continued its exponential growth amid rising adoptions worldwide. Its market cap now stands at $234.6 billion, a 56% increase over the past year.

If successful, SMBC’s initiative could position Japan as a frontrunner in institutional stablecoin issuance while highlighting the growing convergence between legacy banking systems and blockchain infrastructure.