Japanese financial giant Sumitomo Mitsui Financial Group has announced plans to launch a fiat-backed stablecoin on the Avalanche network in partnership with US-based Ava Labs and blockchain infrastructure firm Fireblocks. This groundbreaking project aims to revolutionize cross-border payments by reducing reliance on traditional intermediaries like the SWIFT network.
The stablecoin project is currently in the planning phase, with initial trials set to focus on intercompany payments in the second half of 2025. A full-scale launch is slated for next year, showcasing the commitment of Sumitomo Mitsui Financial Group to modernize the financial landscape.
Ava Labs will take the lead on blockchain development for the stablecoin infrastructure, while Fireblocks will handle token issuance, security, and management systems. Japanese IT firm TIS will provide technical support during the experimental phase, ensuring a smooth and successful rollout.
Sumitomo Mitsui Financial Group is the parent company of Sumitomo Mitsui Banking Corporation (SMBC), Japan’s second-largest bank with assets totaling $1.7 trillion. The bank has been increasingly involved in blockchain technology, co-launching the Token Business Lab in 2022 to explore NFT use cases and participating in stablecoin pilot programs for international settlement.
Japan has been at the forefront of stablecoin regulation, with legislation passed in 2022 classifying fiat-backed stablecoins as “Electronic Payment Instruments.” Regulated banks and licensed financial entities are the only entities permitted to issue stablecoins, demonstrating Japan’s commitment to fostering innovation while ensuring consumer protection.
Globally, traditional financial institutions are showing a growing interest in stablecoin adoption, with major players like Bank of America considering entering the market pending regulatory approval. The stablecoin sector has experienced exponential growth, with a market cap of $234.6 billion and a 56% increase over the past year.
If successful, Sumitomo Mitsui Financial Group’s stablecoin initiative could position Japan as a leader in institutional stablecoin issuance and showcase the convergence between legacy banking systems and blockchain technology. This innovative project highlights the potential for traditional finance to embrace digital assets and modernize the financial ecosystem for the betterment of all stakeholders.