Japan’s MUFG Bank Pilots Tokenized Yen for Corporate Settlements

Japan’s largest financial group, Mitsubishi UFJ Financial Group (MUFG), has launched a pilot program testing a tokenized yen designed for corporate settlements, marking a major step in the country’s efforts to modernize its financial infrastructure with blockchain technology. The trial, which involves several major domestic corporations, aims to explore how digital tokens pegged to the yen could streamline payments, reduce settlement times, and lower transaction costs for businesses.

MUFG said the pilot would focus on inter-company payments, cross-border trade settlements, and integration with smart contract-based workflows. By issuing a tokenized version of the yen on a permissioned blockchain, the bank hopes to demonstrate how financial transactions can become faster, more transparent, and less reliant on intermediaries. The initiative is also part of a broader push by Japan’s financial sector to remain competitive as global peers in Europe, the United States, and Asia accelerate experiments with central bank digital currencies and private-sector stablecoins.

The move comes after years of MUFG’s investment in blockchain research and partnerships. The bank previously explored stablecoin frameworks and worked with fintech firms on tokenization solutions, but this marks its first direct pilot of a large-scale corporate settlement platform using a tokenized domestic currency. Participants in the program include trading companies, logistics operators, and manufacturers that rely heavily on cross-border flows and complex supply chains.

One of the key goals of the project is to test how tokenized yen could improve efficiency in trade finance, an area still plagued by paper-based processes, long settlement cycles, and high operational costs. By embedding payment instructions directly into digital trade documents and smart contracts, MUFG believes the technology could help reduce fraud risks while ensuring that transactions are completed almost instantly once conditions are met.

Regulatory oversight has been central to the initiative, with Japanese authorities signaling support for innovation as long as strong safeguards are in place. The pilot is being conducted under the framework of Japan’s revised Payment Services Act, which provides a clearer legal basis for the issuance of digital tokens backed by fiat currency. This regulatory clarity has made Japan one of the more proactive jurisdictions in experimenting with tokenized money for real-world use.

Industry analysts see MUFG’s pilot as a potential blueprint for how large commercial banks might coexist with central bank digital currencies in the future. While the Bank of Japan continues its research into a retail digital yen, private-sector efforts like MUFG’s could address more specialized use cases, such as large-value corporate payments and global trade flows.

The success of the pilot could have wide-reaching implications for Japan’s corporate sector, particularly exporters, which have long struggled with settlement inefficiencies when dealing with overseas partners. If the tokenized yen proves scalable, it could also open the door to integration with regional payment corridors in Asia, strengthening Japan’s role in cross-border financial infrastructure.

For MUFG, the project reflects both a defensive and an offensive strategy: defending its role as a leader in payments innovation within Japan while positioning itself at the forefront of the global shift toward tokenized money.