SMBC partners on $230 billion stablecoin market framework

Sumitomo Mitsui Financial Group (SMBC), Ava Labs, Fireblocks, and TIS Inc. have signed a Memorandum of Understanding (MoU) to develop a stablecoin framework in Japan.

The collaboration aims to explore the issuance and circulation of stablecoins pegged to the U.S. dollar and Japanese yen, focusing on their use in settling tokenised real-world assets such as bonds, stocks, and real estate.

The partnership leverages Ava Labs’ blockchain expertise and Fireblocks’ digital asset security systems to establish the infrastructure for stablecoin operations.

TIS Inc. will provide technical support during the experimental phase, set to begin in late 2025, with a potential commercial launch planned for 2026.

Stablecoins are increasingly seen as a solution for streamlining cross-border payments by reducing reliance on intermediaries like SWIFT, which often lead to higher fees and longer processing times.

SMBC’s initiative aligns with Japan's favorable regulatory environment for stablecoins, following amendments to the Payment Services Act in 2023 that classify fiat-backed stablecoins as "Electronic Payment Instruments."

This legal clarity has enabled financial institutions to actively explore their use for remittances and settlements.

The global stablecoin market has grown nearly 50% over the past year, reaching $230 billion in market capitalisation.

Stablecoins are viewed as a bridge between traditional finance and digital asset markets due to their price stability and efficiency in transactions.

Paolo Ardoino, CEO of Tether (CRYPTO:USDT), highlighted their role in backing tokenised assets with U.S. Treasury instruments, underscoring their integration into global financial systems.

SMBC’s move reflects broader trends in financial innovation as institutions worldwide adopt blockchain solutions to modernise payment systems.

By collaborating with Ava Labs and Fireblocks, SMBC aims to position itself at the forefront of this transformation while addressing regulatory requirements and operational challenges.