Japan Launches First Regulated Yen Stablecoin

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Introduction

Welcome to the Tokenized newsletter, brought to you by the creators of the Tokenized Podcast Simon Taylor of Fintech Brainfood, Pet Berisha of Sporting Crypto, and Shwetabh Sameer of Molten Ventures.

We are the newsletter for institutions that need help preparing for a Tokenized future.

We run through the headlines every week, what it means for you and a market readout. Always with an institutional, business-focused perspective. 

Join us every week as we meet your Tokenization needs.

Simon’s Market Readout 💬 

Every year Money20/20 has a theme. 

2021 was web3 everywhere, crypto startups covering every surface. 2022 brought the regulatory backlash - the party officially over. 2023 became the year of the embedded finance soul-searching session: Is FinTech dead? Where's the growth? How do we all pivot into payments?

But 2025? This year is unquestionably the year of stablecoins. And it's nothing like 2021. No marketing budgets thrown at NFT parties. No hype coins. No breathless keynotes about disrupting everything.

Stablecoins have decoupled from hype. Entirely.

a16z Crypto's latest 2025 State of Crypto report confirms it: the correlation has disappeared. This week, Citi announced a partnership with Coinbase to bring institutional-grade on/off ramps directly into their banking network - treating stablecoins as another rail, not an experiment. Banks can chase headlines around earnings season, sure. But plugging something into your core infrastructure and offering it to clients requires a materially different level of effort. That effort signals something fundamental has shifted. Something that won't reverse. 

Three strategic considerations:

1. Infrastructure commitments reveal true conviction. Marketing partnerships are cheap; technical integration into banking networks is expensive and requires board-level sign-off. When Tier 1 institutions start connecting stablecoin rails to their existing payment infrastructure, they're making multi-year infrastructure bets.

2. The decoupling from crypto volatility creates legitimacy. Stablecoins are no longer evaluated based on Bitcoin's price movements or NFT floor prices. They're being assessed on settlement speed, cost efficiency, and regulatory compliance - the metrics that matter for treasury operations.

3. The window for strategic positioning is narrowing. The innovators built the rails. The early adopters are now integrating. The question for everyone else: are you building the capabilities to compete when this becomes table stakes for cross-border settlement?

What are you going to do about it? Because the institutions making infrastructure decisions today are determining competitive positioning for the next decade. 

This is the beginning of onchain settlement infrastructure. And the deployment phase has already begun.

Stories You Can't Miss 📰

🏛️ Japan Launches First Regulated Yen Stablecoin… And Tests the Dollar-First Assumption

Key Points:

• JPYC officially launched Monday as Japan's first legally recognized yen stablecoin, licensed as a fund transfer service provider under the country's Payment Services Act

• The stablecoin is 100% backed by yen deposits and Japanese government bonds (JGBs), with complete 1:1 convertibility, no algorithmic mechanisms or offshore reserves

• Day-one integrations with enterprise software platforms serving over 10,000 Japanese companies, signaling immediate business adoption rather than speculative trading

• JPYC targets ¥10 trillion ($65 billion) in circulation within three years, a figure USDT took a decade to achieve—and comparable to USDC's current $40 billion market cap

• The issuer will waive transaction fees initially, generating revenue solely from interest earned on JGB holdings

The Tokenized Take:

Japan just launched the first legally recognized yen stablecoin. And it tells something that most would not say out loud about dollar stablecoins: the assumption that everyone wants dollar exposure was never about what users needed - it was about what was available.

That assumption worked for a reason. USD is the global reserve currency. Cross-border payments are genuinely broken. And dollar access meant liquidity access. But consider two inconvenient facts: a large share of stablecoin activity is happening in APAC and LATAM, and the primary friction point isn't moving value across borders - it's the off-ramp to local currency. Every time a Philippine remittance recipient or Indonesian merchant converts USDT to local currency, they're paying FX spreads and dealing with conversion delays. Local stablecoins eliminate that friction entirely.

JPYC matters because yen isn't some emerging market experiment - it's the third most-traded currency in global FX markets with ~$1.1-1.2 trillion in daily volume. It's a G7 currency with institutional depth and sovereign backing. If you're a Japanese business settling domestic payments, you don't want currency risk or dollar conversion overhead. You want yen that moves instantly and settles onchain. JPYC delivers that without forcing a detour through USD intermediation.

But here's the real signal: Japan's three megabanks (MUFG, Sumitomo Mitsui, and Mizuho) are jointly developing their own yen stablecoin targeting ¥1 trillion in institutional issuance, serving 300k+ corporate clients, launching via MUFG's Progmat platform by early 2026. When banks this large move this fast, it signals clear corporate treasury demand. JPYC isn't David versus Goliath, it's the startup that validated the market right before institutional players enter. The banks wouldn't be mobilizing unless they'd already confirmed enterprise demand from their existing client base.

The ¥10 trillion target sounds aggressive until you recognize what's actually happening. USDT took a decade to reach $183 billion because it was building an entirely new market. JPYC is simply offering Japanese businesses something they already do - yen transactions – but with better infrastructure. Day-one integrations with platforms serving 10,000+ companies suggests this isn't speculative positioning; it's replacing existing payment rails with faster, cheaper settlement.

This only works if two things are true: domestic businesses actually want currency-native settlement, and other regulators follow Japan's lead. The first seems validated by early enterprise traction. The second is already in motion - Singapore's MAS is advancing its stablecoin framework, South Korea is exploring similar regulations, and the EU's MiCA creates the infrastructure for euro stablecoins. We're 12-18 months from a multi-currency stablecoin environment where dollar tokens face actual competition.

The strategic question becomes: if we're genuinely rebuilding FX infrastructure, we need more tokens, not just more dollar tokens. Japan just demonstrated the regulatory pathway. The question is whether other G7 economies move before dollar stablecoin network effects become unbeatable. Or whether we're watching the early stages of currency competition playing out in tokenized form.

🏛️ IBM Launches Blockchain Custody on Mainframes - Because Banks Extend Infrastructure, They Don't Replace It

Key Points:

• IBM launched Digital Asset Haven in partnership with Dfns, bringing blockchain custody to the IBM Z mainframes that currently process 70% of the world's transaction value

• The platform supports 40+ blockchains for custody, transactions, and settlement, but runs on the same infrastructure banks already use for SWIFT messages, ACH processing, and core banking

• Available as SaaS and hybrid SaaS in Q4 2025, with on-premises deployment for Q2 2026 - targeting institutions that won't migrate critical infrastructure to new vendors

• Digital asset custody now uses the same security model, compliance frameworks, and vendor relationships banks spent decades getting approved by regulators

• The partnership positions Dfns as the wallet infrastructure provider inside the systems that already run global finance

The Tokenized Take:

IBM just launched a blockchain wallet in partnership with Dfns to bring digital assets onto the infrastructure that already processes 70% of the world's transaction value. Your mortgage, your salary, that coffee you bought this morning – most of it will be running through IBM mainframes right now. And that's exactly why this matters.

Every custody provider has been trying to convince banks: "Move your digital assets to our shiny new infrastructure." Banks keep saying no. Not because the tech is bad - because banks don't replace infrastructure that moves trillions. They extend it.

IBM Digital Asset Haven runs on the same IBM Z mainframes that already process the world's money. Same boxes. Same security model. Same compliance frameworks that banks spent decades getting approved by regulators. Dfns built the wallet technology supporting 40+ blockchains with all the features you'd expect. But the genius isn't the features - it's that digital asset custody just became a Tuesday problem instead of a board-level decision.

Banks will still run governance and procurement processes - vendor risk doesn't disappear just because IBM's name is on the platform. But the friction reduces dramatically when you're working within existing vendor relationships and approved security controls rather than onboarding an entirely new infrastructure provider. Banks can custody Bitcoin using the same systems that custody their SWIFT messages, leveraging governance frameworks already in place. The operational friction that's kept institutions in pilot purgatory for five years just got substantially smaller.

This is what stablecoins have been waiting for. Not another startup promising to replace banks - but a way to sit inside the infrastructure that already runs global finance. When JPMorgan wants to settle repo transactions with tokenized Treasuries, or Bank of America needs to custody stablecoin reserves for corporate clients, they can deploy it on infrastructure their risk committees already approved in 2003.

The strategic unlock is operational continuity. Institutions have been paralyzed by the prospect of migrating critical operations to new vendors with unproven security models and uncertain regulatory treatment. IBM eliminates substantial friction by offering blockchain functionality on infrastructure banks already trust with trillions in daily settlement. It's not innovative - it's pragmatic. And for institutional adoption, pragmatism beats innovation every time.

Dfns just became a major player by making the only strategic decision that mattered: don't compete with existing infrastructure, become part of it. Building the best wallet technology means nothing if it sits outside the systems banks actually use. Integrating with IBM Z means every bank already running mainframe infrastructure can add blockchain custody without complete vendor migration risk.

But here's the real question: will this partnership actually deliver? IBM's enterprise blockchain history is mixed - TradeLens shut down after four years despite solid technology, undermined by consortium governance challenges and limited carrier adoption. World Wire faded into obscurity. The pattern isn't that IBM's blockchain tech doesn't work; it's that enterprise blockchain projects struggle to move from pilot to scaled production deployments even when the technology functions. Partnerships get announced. Pilots get launched. Production workloads at scale don't always follow. IBM may run the infrastructure, but it's not front of mind for innovation. Adoption will hinge on whether IBM hits delivery timelines and produces reference clients running production workloads, not just proof-of-concepts.

The bull case: IBM's existing banking relationships and embedded infrastructure position mean custody deployment happens through existing vendor channels with established governance frameworks. The bear case: IBM's track record suggests execution risk remains high, and selling "blockchain on mainframes" requires convincing conservative IT departments to bet on technology they've spent years avoiding - within an organization not known for moving fast on emerging tech.

Game on. If IBM executes and produces credible reference deployments in 2026, this shifts institutional adoption from "multi-year infrastructure buildout" to "quarterly deployment cycle." If it stalls like previous enterprise blockchain initiatives, it becomes another data point proving that infrastructure availability was never the real constraint - organizational willingness and vendor execution were.

🏛️ Citi Adds Stablecoin Payouts For Corporate Clients via Coinbase Partnership

Key Points:

• Citi announced a partnership with Coinbase to develop digital asset payment capabilities for institutional clients, and exploring "alternative fiat-to-stablecoin payout methods" in the coming months

• Corporate treasuries will be able to access blockchain rails through their existing Citi banking relationship: same controls, same compliance framework, with stablecoin settlement as the stated roadmap beyond initial fiat conversion capabilities

• Citi banks 90% of the top eCommerce companies and 15 of the world's 20 largest FinTechs - clients who are increasingly seeking programmability, conditional payments, and 24/7 settlement capabilities that traditional rails don't provide

• The partnership is part of Citi's broader digital asset stack: crypto custody launching in 2026 (in development 2-3 years), Citi Ventures investment in BVNK stablecoin infrastructure in October, and CEO Jane Fraser confirming in July that Citi is exploring issuing its own stablecoin

• Citi raised its forecast for the digital dollar market to $4 trillion by 2030, up from the current $315 billion, signaling institutional conviction that stablecoin payment infrastructure is moving to production scale

The Tokenized Take:

This isn't Citi "going crypto." This is Citi doing what Citi does: serving corporate demand.

Citi banks 90% of the top eCommerce companies and 15 of the world's 20 largest FinTechs. Those clients are asking for blockchain-based settlement capabilities. Not as an experiment. As a payment rail they actually need. When you're Shopify moving cross-border payments for merchants, or Stripe settling platform payouts, or any global eCommerce operator managing 24/7 treasury operations - stablecoins solve operational problems that traditional rails don't.

Stablecoins have crossed the threshold from "interesting technology" to "payment method our corporate clients require." When Citi commits to exploring stablecoin settlement infrastructure, it's because treasury departments are demanding it at scale. Banks don't build native integrations for pilot programs. They build them when client demand reaches a volume that justifies the compliance, risk, and operational investment required.

But here's what makes this partnership strategically significant: it's not standalone. Citi is assembling a digital asset infrastructure stack across multiple layers, and this Coinbase integration is a critical piece.

The full picture: Citi is launching crypto custody services in 2026 after developing the capability for the past 2-3 years, enabling the bank to hold native Bitcoin and Ethereum for institutional clients. Citi Ventures invested in BVNK - a stablecoin infrastructure platform processing $20 billion annually - just weeks ago in October. And CEO Jane Fraser confirmed in July that Citi is exploring issuing its own stablecoin, stating "we are looking at the issuance of a Citi stablecoin" during the bank's Q2 '25 earnings call.

This creates a vertical integration strategy that changes the competitive landscape: custody (2026) → settlement rails (Coinbase partnership now) → potential Citi-issued stablecoin (future). Without this context, the Coinbase partnership reads like a tactical vendor integration. With it, you're watching Citi position itself across critical layers of the digital asset infrastructure stack for corporate clients.

Consider the roadmap for corporate treasury operations. Corporate client needs to pay a supplier cross-border.

• Old options through Citi: SWIFT (days, expensive), correspondent banking (slow, opaque), or Citi Token Services (faster, but closed loop within Citi's permissioned network).

• Coming option: stablecoin settlement through Coinbase integration. Same Citi dashboard. Same compliance relationship. Just another rail for treasury to choose based on speed, cost, and finality needs.

When you need 24/7 settlement to Indonesia, treasury picks the rail. Blockchain becomes one option in the mix. That's the strategic shift - not replacement, but integration. Citi's Head of Payments Debopama Sen noted that clients are increasingly seeking programmability, conditional payments, and round-the-clock payment capabilities. Translation: corporate treasury requirements now include blockchain rails as table stakes for competitive payment infrastructure.

"With more than 300 payment clearing networks across 94 markets globally, we see collaborating with Coinbase as a natural extension of our 'network of networks' approach," Citi stated in the announcement. They're not treating stablecoins as separate infrastructure. They're treating it as a payment rail option alongside everything else. When FedNow doesn't reach your jurisdiction, when SWIFT settlement windows create float problems, when instant cross-border finality matters more than correspondent banking costs - treasury selects blockchain. The infrastructure abstraction is the point.

Now project forward. If Citi launches custody in 2026, they can hold client crypto assets directly - no third-party custodian risk, no additional vendor onboarding for compliance teams. The Coinbase partnership provides immediate settlement rails while Citi develops its own infrastructure. And if Citi issues its own stablecoin, they can offer issuance, redemption, and treasury management for a dollar-backed token that settles natively across their global network. That's not participating in the stablecoin economy - that's building critical infrastructure positions within it.

The bull case: Citi becomes the integrated digital asset bank for institutional clients. Custody your Bitcoin, settle payments via USDC through Coinbase today and potentially via Citi stablecoin when it launches, all within existing banking relationships and compliance frameworks. The bear case: execution risk remains high, regulatory clarity for bank-issued stablecoins is still uncertain, and Citi's enterprise blockchain track record (remember Citi Coin that never launched?) suggests ambitious strategy doesn't always equal delivered products.

But the market positioning is coming into focus. JPMorgan CEO Jamie Dimon has said the bank will let clients buy crypto but will not provide crypto custody, a stance that leaves that service to competitors. Bank of America and Wells Fargo are "exploring" stablecoin initiatives, but without announced timelines. Citi, by contrast, is executing: investing in infrastructure providers (BVNK), building custody capabilities (targeting 2026), establishing settlement partnerships (Coinbase), and evaluating potential stablecoin issuance. That's not exploration - that's market positioning.

The next twelve months determine which banks treat this as strategic priority versus compliance obligation. The institutions that integrate deeply (i.e., building treasury workflows, compliance automation, client education, and proprietary infrastructure around digital asset rails) position themselves as infrastructure providers for the next decade of cross-border finance. The ones that wait become the correspondent banks of 2035: functional but increasingly bypassed.

Citi just declared which category they're targeting.

📰 Some More News:

🏦 Tokenization, Stablecoins & Finance

• Western Union to Launch Stablecoin and Cash Off-Ramps for Digital Assets  (Read more here)

• Chainlink Underpins Balcony's $240B Real Estate Tokenization Platform - (Read more here)

• Tokenized Nasdaq Futures Enter Top 10 by Volume on Hyperliquid - (Read more here)

• Tether Tokenized Gold Reserves Exceeded 11.6 Tons in Q3 (Read more here)

• SharpLink Deploys $200M ETH on Linea Layer 2 (Read more here)

• Bitwise Solana Staking ETF Debuts With $223M (Read more here)

• Crypto Custody Becomes Land Grab for FinTechs, Nonbanks (Read more here)

• Wealth Managers Scramble to Add Crypto as UAE's Ultra-Rich Demand Digital Assets (Read more here)

• Coinbase Prime and Figment Expand Institutional Staking Beyond Ethereum (Read more here)

• Hang Seng Completes Phase 2 of Digital Money Pilot (Read more here)

• Boerse Stuttgart Digital Partners with Trever for Digital Assets (Read more here)

• MetaMask Goes Multichain: One Account Supports EVM, Solana and Soon Bitcoin (Read more here)

🤑 Funding and M&A

• TZero Plans Public Listing as Tokenization Push Gains Steam (Read more here)

• OceanPal Raises $120M to Build NEAR Token Treasury Company (Read more here)

• The Secret Behind Coinbase's Billion-Dollar Acquisition Strategy (Read more here)

• MegaETH Raises $50 Million in Minutes as Token Sale Tops 3x Demand (Read more here)

• BitMine's Ethereum Holdings Surpass 3.3 Million ETH After Latest Purchase (Read more here)

• David Beckham-Backed Prenetics Raises $46.8M to Advance Bitcoin Treasury  (Read more here)

• A16z Leads $12.9M Round for ZAR to Bring Stablecoins to Pakistan's Unbanked  (Read more here)

💼 Government & Policy

• France Adopts Bitcoin Reserve Motion, Opposes Digital Euro  (Read more here)

• Canada Advances Stablecoin Framework Ahead of Federal Budget Update (Read more here)

• Bank of Korea Warns on Stablecoin Depeg Risks, Says Banks Should Lead (Read more here)

• Norwegian Tax Authority Sees 30% Jump in Crypto Reporting (Read more here)

• Argentine Stablecoin Use Surged Ahead of President Milei's Midterm Win (Read more here)

• Trump's Truth Social Launches Prediction Markets via Crypto.com Partnership (Read more here)

• Democrat Seeks Crypto Trading Ban for Politicians Following Binance Founder's Pardon (Read more here)

• Polymarket Eyes U.S. Comeback by November (Read more here)

Tweet of the Week 🐤 

From jrag.eth

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