Sumitomo Mitsui Financial Group (SMFG), Japan's second-largest bank, is set to test a stablecoin platform in collaboration with Ava Labs and Fireblocks, beginning in the latter half of 2025.

A demonstration experiment for the stablecoin is planned for late 2025, aimed at evaluating its effectiveness for inter-company payments, with an official release anticipated in 2026.

This initiative marks SMBC's exploration of the stablecoin market, partnering with Avalanche's Ava Labs, Fireblocks, and IT service provider TIS as of April 2, 2025.

The growing popularity of stablecoins is largely due to their efficiency in remittances and payments, offering a faster and cheaper alternative to traditional banking.

Recent regulatory changes in Japan now permit stablecoin issuers to back their coins with short-term government bonds and fixed-term deposits, enhancing market reliability.

The adoption of stablecoins in Japan is expected to improve transaction efficiency, reduce banking fees, and facilitate secure, transparent blockchain transactions.

The SMFG stablecoin project aims to enhance transaction efficiency, lower costs, and attract global investors, with a full launch planned for 2026.

Ava Labs will provide the blockchain infrastructure for the stablecoin, while Fireblocks will ensure the security of digital assets and transactions.

The collaboration will also focus on developing a framework for issuing stablecoins and identifying practical applications, particularly for tokenized financial and real-world assets.

Japan has proactively regulated stablecoins, officially recognizing them as electronic payment instruments under the revised Payment Services Act, which restricts issuance to licensed banks.

This move by SMBC reflects a broader trend, as various entities, including Fidelity Investments and the state of Wyoming, are also entering the stablecoin market.

SMBC has a history of involvement in digital asset projects, including establishing a digital asset custodian in 2022 and testing security token issuance in 2021.