Japan’s Finance Minister Satsuki Katayama delivers a speech during the House of Representatives plenary session in Tokyo on February 20, 2026.
Kazuhiro NOGI/AFP via Getty Images
Japan’s Financial Services Agency has removed the ¥1,000,000 (approximately $6,276 USD — exchange rate as of August 25, 2026; conversions are approximate) per-transaction ceiling that had confined second-category stablecoin operators to retail micropayments since 2023, while simultaneously standing up the country’s first dedicated Cryptocurrency and Stablecoin Division to oversee the larger transactions the amendment now permits. The two moves are not parallel reforms — they are a single coupled system: the FSA can only afford to lift the prudential cap because it now has the supervisory infrastructure to monitor what happens when it does.
The cap removal, confirmed August 24, 2026, affects licensed second-category Funds Transfer Service Providers under Japan’s revised Payment Services Act — the tier that includes JPYC Inc., operator of Japan’s first fully regulated yen-pegged stablecoin. Under the old ceiling, a corporate treasurer could not use JPYC to settle a single invoice above ¥1,000,000 (~$6,276) without exceeding the limit, making the stablecoin viable for retail payments but structurally useless for the B2B settlements, cross-border remittances, and treasury operations it was designed to serve.
Why the Cap Existed — and What Its Removal Means
Japan’s Payment Services Act creates three functionally distinct license categories for stablecoin-related activity, and the logic of each tier explains why the cap existed and why it is now going away.
At the bottom of the stack sit second-category Funds Transfer Service Providers — operators that register with the FSA rather than obtain a full license, face lower capital requirements, and, until now, processed no single transaction above ¥1,000,000 (~$6,276). The cap was a prudential blunt instrument: it prevented a lightly-capitalized, lightly-supervised operator from accumulating the kind of systemic exposure that a much larger, more tightly regulated institution would be required to hold capital against. Without a cap, a second-category operator processing a single ¥100 million (~$627,621 USD) corporate settlement would carry risk proportional to a first-category operator — without the regulatory framework to match.
Above them sit first-category providers, whose full licensing and higher capital requirements come with unrestricted transaction capacity. And above them sit trust bank-backed Type III Electronic Payment Instruments, the highest tier — where SBI Shinsei Trust Bank’s JPYSC operates. JPYSC was always cap-free because trust bank-issued stablecoins carry a direct legal claim under trust law to the underlying yen reserves, held in segregated trust accounts. The institutional market that JPYC could not touch was always available to JPYSC.
The cap removal partially levels that playing field. JPYC Inc. can now compete structurally with JPYSC for institutional business — not because their issuance architectures are equivalent (they are not: JPYSC’s trust-law holder protections remain stronger) but because the transaction-size ceiling that forced institutional clients to choose the more expensive trust-bank product no longer exists.
What the New Division Actually Does
The FSA announced on August 5, 2026, the creation of its dedicated Cryptocurrency and Stablecoin Division, which became operational two days later, on August 7. The division sits under the newly formed Asset Management and Insurance Supervision Bureau — a deliberate elevation from the scattered crypto desks previously buried inside the Risk Analysis Division of the Comprehensive Policy Bureau.
Before this reorganization, Japan’s crypto oversight was divided between two units: the Crypto, Blockchain and Innovation Office and the Crypto Monitoring Office, neither of which had the headcount, budget, or authority of a full division. The new structure consolidates three specialized functions:
The Crypto Asset Monitoring Office replaces the old monitoring office and gains dedicated staffing to run parallel exchange-surveillance investigations — a capability the previous understaffed desk could not sustain simultaneously across Japan’s growing roster of registered platforms.
The Innovation Promotion Office handles policy development for new digital asset categories and coordinates the overlap between the Financial Instruments and Exchange Act framework (which now governs 105 classified crypto assets, following the National Diet’s FIEA amendment passage on July 15, 2026) and the Payment Services Act framework (which governs stablecoins as Electronic Payment Instruments).
The Digital Payment Planning Office is a new unit with no prior counterpart — its mandate is to handle stablecoin policy coordination, foreign stablecoin equivalence determinations, and cross-border EPI planning. The 259-comment public consultation on the foreign stablecoin ordinance was processed under predecessor desks before this office existed; future equivalence reviews will run through a purpose-built team.
The organizational upgrade matters for two reasons that go beyond org-chart tidiness. First, a dedicated division can develop institutional expertise over time — staff who specialize in stablecoin architecture, smart contract auditing, and cross-border settlement mechanics rather than rotating generalists handling crypto alongside payments and securities. Second, it signals regulatory permanence: an FSA desk can be folded into another bureau without notice; a division under a named bureau requires a formal reorganization to undo.
The Enforcement Signal
The timing of the new division’s launch is not coincidental.
Japan’s National Diet passed the FIEA amendment on July 15, 2026. A separate provision of that amendment, which raised the maximum prison term for operating an unregistered crypto exchange from three years to ten years and the maximum fine from ¥3 million (~$18,828 USD) to ¥10 million (~$62,760 USD), took effect around August 4-5 — the same week the new division was announced and the same week Bitget stopped accepting new registrations from Japanese residents.
Bitget had received FSA warning letters twice — in March 2023 and again in November 2024 — for operating without registration, alongside Bybit, KuCoin, and MEXC Global. The FSA also requested that Apple and Google remove unregistered operators’ apps from domestic app stores. After three years of warnings and a penalty regime that tripled in severity overnight, Bitget announced its exit on August 3, 2026. Existing accounts will be placed in close-only mode beginning November 1, 2026; any remaining positions will be forcibly closed on December 31, 2026.
The new Cryptocurrency and Stablecoin Division did not cause Bitget to leave Japan. The penalty enhancement did. But the division is the institutional infrastructure that will make that enforcement posture permanent, systematic, and scalable — not dependent on a single FSA bureau deciding to prioritize offshore exchange compliance in a given quarter.
Japan’s Three-Tier Stablecoin Stack and Who Gains
The cap removal lands in a yen stablecoin market that has developed faster than most observers anticipated.
Japan’s domestic stablecoin infrastructure now operates across three tiers. JPYC Inc., which received Japan’s first stablecoin license in August 2025 and launched commercially in October 2025 on Ethereum, Avalanche, and Polygon, had by mid-2026 accumulated more than ¥2 billion (approximately $12.6 million USD) in on-chain circulation — backed by yen deposits and Japanese Government Bonds. It completed two Series B funding closes totaling approximately ¥4.6 billion (approximately $28.9 million USD), backed by institutional investors including Metaplanet, with the investor base dominated by corporate Japan rather than crypto-native funds. The ¥1 million cap was the structural ceiling that prevented its institutional ambitions from being anything more than ambitions. Its removal changes that.
JPYSC, the trust bank-backed instrument issued by SBI Shinsei Trust Bank and developed by SBI Holdings in partnership with Singapore’s Startale Group, launched in June 2026, raising approximately $70 million on its first day of issuance. Startale CEO Sota Watanabe described JPYSC as infrastructure for “Japanese retail users, enterprises, and global financial institutions” to transact onchain. The cap removal now means JPYC can theoretically serve that same institutional market — but JPYSC’s trust-law structure, which gives holders a direct legal claim to the underlying yen in a segregated trust account, remains a stronger institutional protection than the fund-transfer model.
At the top of the domestic stack sit Japan’s three megabanks — MUFG, SMBC, and Mizuho — which reached a joint development agreement in June 2026 to develop a joint yen stablecoin through the Progmat platform, targeting ¥1 trillion (approximately $6.28 billion USD) in B2B stablecoin volume by 2028 across more than 300,000 corporate clients. That target is approximately 498 times the total current yen stablecoin market capitalization — and represents the most credible near-term benchmark for what this market could become if institutional adoption follows the infrastructure that has been built.
How the Foreign Stablecoin Pathway Fits
The cap removal’s effect is not limited to domestic yen stablecoins. Foreign stablecoin issuers that have cleared Japan’s “equivalence” standard — demonstrating that their home-jurisdiction regulation meets FSA standards for reserves, consumer protection, and issuer oversight — now gain a more capable supervisor to process future equivalence applications and a broader market to serve.
Ripple’s RLUSD cleared Japan’s equivalence standard and launched distribution through SBI VC Trade on June 25, 2026, while Circle’s USDC had been available in Japan through that same exchange since March 2025; Circle and Nomura announced plans for a USDC-based corporate settlement service on the same date, targeting 2027. Under Japan’s framework, foreign stablecoin issuers do not distribute directly to Japanese users — distribution runs through licensed Electronic Payment Instrument Exchange Service Providers (EPIESPs), with SBI VC Trade as licensed EPIESP for foreign stablecoin distribution. That distribution-first architecture means the cap removal’s benefit for foreign stablecoins flows through the licensed intermediary layer rather than the issuer directly.
A separate amendment, which expanded travel-rule coverage to 63 jurisdictions effective August 3, 2026, means each high-value transaction newly permitted by the cap removal now carries a mandatory originator/beneficiary data transmission obligation when the counterparty is in a covered jurisdiction. Compliance infrastructure grows with the cap; so does the compliance burden.
What Still Needs Resolution
The FSA has committed to finalizing its comprehensive stablecoin and custody framework by the end of 2026 — a deadline the Blockchain Council Japan (BCCC) is treating as a forcing function for its newly formed stablecoin tax and DeFi policy committee. That committee is scheduled to hold its kickoff event on September 15, 2026, in Tokyo.
The framework finalization matters because the cap removal, while consequential, resolves only the transaction-size constraint. Three structural gaps remain. First, there are no specific tax rules for stablecoin income received by contractors — the July 15 FIEA amendment explicitly excluded stablecoins, leaving them under the Payment Services Act without corresponding income-tax guidance. Second, DeFi activity — staking, yield farming, liquidity provision — remains taxed as miscellaneous income at progressive rates reaching 55%, regardless of whether the underlying assets are otherwise regulated. Third, the equivalence standard for foreign stablecoins is a qualitative regulatory judgment, not a published checklist — future applicants must negotiate it with the Digital Payment Planning Office without a defined scoring rubric.
Lawson’s stablecoin payment pilot — testing USDC, USDT, and JPYC — signals where retail adoption of stablecoin rails is heading. The institutional infrastructure — cap-free transactions, a dedicated supervisory division, cleared foreign stablecoin pathways — has now largely been assembled. The outstanding questions are tax and accounting frameworks that will determine whether Japanese corporations treat stablecoin settlement as mainstream finance or a compliance-intensive specialty.
Frequently Asked QuestionsWhat exactly was Japan’s ¥1,000,000 stablecoin cap, and who did it apply to?
The cap was a per-transaction limit — approximately $6,276 USD at current exchange rates — applied specifically to second-category Funds Transfer Service Providers under Japan’s Payment Services Act. This is the tier that JPYC Inc., operator of Japan’s first fully regulated yen stablecoin, operates under. The cap did not apply to first-category providers or to trust bank-backed Type III Electronic Payment Instruments like JPYSC. Its purpose was to prevent lightly-capitalized second-category operators from accumulating systemic exposure through high-value transactions without the capital requirements that higher-tier operators must meet. Its removal means those operators can now process corporate-scale payments — cross-border settlement, treasury operations, B2B invoice clearing — that the ceiling previously made impossible.
What is the difference between JPYC and JPYSC, and how does the cap removal change their competitive positions?
JPYC is issued by JPYC Inc. under a second-category Funds Transfer Service Provider license — the tier that formerly faced the ¥1,000,000 (~$6,276) per-transaction ceiling. JPYSC is issued by SBI Shinsei Trust Bank under the trust bank model, classified as a Type III Electronic Payment Instrument with no transaction cap from launch. Structurally, JPYSC holders carry a direct legal claim under trust law to the underlying yen in segregated trust accounts — a stronger protection than the fund-transfer model JPYC uses. The cap removal means JPYC can now pursue the institutional market on transaction size, but JPYSC’s trust-law structure remains a meaningful differentiation for counterparties who need the strongest possible settlement guarantee.
What does Japan’s new FSA Cryptocurrency and Stablecoin Division actually do that the old desks couldn’t?
Before August 7, 2026, crypto-related oversight at the FSA was distributed between two units inside the Risk Analysis Division of the Comprehensive Policy Bureau: the Crypto, Blockchain and Innovation Office and the Crypto Monitoring Office. Neither had the staff, budget, or authority to run sustained parallel investigations or develop deep institutional expertise in stablecoin architecture. The new division — with three dedicated sub-offices (Crypto Asset Monitoring Office, Innovation Promotion Office, and Digital Payment Planning Office) under the Asset Management and Insurance Supervision Bureau — can pursue multiple enforcement actions simultaneously, process foreign stablecoin equivalence applications through a purpose-built team, and build the kind of specialized knowledge base that consistent, technically competent regulation requires.
How does the cap removal interact with Japan’s travel-rule and AML requirements?
High-value transactions newly permitted by the cap removal are not deregulated — they carry the same AML/KYC obligations as all stablecoin transfers, plus travel-rule transmission requirements for transactions to counterparties in covered jurisdictions. Japan expanded its travel-rule coverage on August 3, 2026, adding new equivalent jurisdictions whose regulators can cooperate with the FSA on cross-border transaction monitoring. An operator processing a ¥10 million (~$62,762 USD) stablecoin settlement — previously impossible under the cap — must now collect, store, and transmit originator and beneficiary data in covered transactions. The cap removal lifts the transaction-size constraint; it does not lighten the compliance burden.