Mega bank strategic shift towards building financial infrastructure in the Web3 era—2026 will be the year where "programmability" becomes the key

In 2026, Japanese financial institutions will finally embark on full-scale development of digital assets. As exemplified by the joint stablecoin project announced by the three megabanks last November, the integration of traditional financial systems with blockchain technology is transitioning from the theoretical stage to implementation. At the same time, the regulation of cryptocurrencies is expected to shift into the Financial Instruments and Exchange Act (FIEA), paving the way for bank subsidiaries to engage in cryptocurrency businesses.

Mr. Hiroo Iso, Executive Managing Director and Group CDIO of Sumitomo Mitsui Financial Group (SMBC Group), characterizes this turning point as “a catalyst that will fundamentally change the management model of banks through digitization, stablecoins, and tokenization.”

Why did the megabanks decide to jointly issue a stablecoin?

The background of the joint stablecoin project by the three megabanks is driven by international concerns. In the U.S., the enactment of the GENIUS Act has rapidly advanced the regulatory framework for the stablecoin market. Currently, the total market capitalization of dollar-denominated stablecoins has reached approximately 40 trillion yen, becoming an essential component of Bitcoin trading.

Institutional investors, and even sovereign (government-related) funds, are now purchasing Bitcoin via stablecoins. Despite this, Japan lacks such infrastructure, and there is shared concern among megabanks and the Financial Services Agency that inaction could result in losing part of their monetary issuance authority.

After several years of overseas case studies and PoC testing, followed by domestic legal reforms in 2024 and regulatory developments in the U.S. in 2025, the project has finally moved toward concrete planning.

Creating a “connection” between existing finance and decentralized finance is urgent

The joint issuance by the three megabanks is still at the PoC stage, not an official issuance decision, but from the outset, “aligning conditions” is prioritized. This approach is based on lessons learned from the early cashless payment era, where multiple incompatible platforms emerged.

Ideally, each bank will focus on application-layer competition on a common infrastructure. A particularly important aspect is “connecting existing payment systems with blockchain-based services.” Currently, traditional financial infrastructure such as the Zengin Network and BOJ Net are completely separate from Web3-style decentralized finance. The moment these are connected is expected to be a major scale transition point.

Mitsubishi Corporation was chosen as a target for proof-of-concept experiments because of the inefficiencies in global corporate cash management. Funds dispersed worldwide are constrained by operating hours (cut-off times), leaving overnight periods with no yield. Centralizing these funds into a shared pool that operates 24/7/365 would dramatically improve corporate capital efficiency.

Parallel efforts are underway for cross-border remittances and AML/CFT verification, but these are limited to initial use cases for now.

Differentiation from JPYC and services for individuals

As of October 2025, JPYC has issued a stablecoin denominated in Japanese yen. However, JPYC has an issuance cap of 1 million yen.

The advantage of the joint stablecoin project by the three megabanks lies in direct connection to the Zengin Network and BOJ Net. Achieving this connection quickly with JPYC would pose significant technical challenges.

However, the joint stablecoin by the three megabanks is not primarily aimed at small-scale individual payments. There are already alternative routes, such as “Kotorasoukin,” operated by multiple major banks, to reduce load on the Zengin system. JPYC and the joint stablecoin are positioned as “complementary coexistence,” with no current plans to issue wallets for individuals. Nonetheless, interoperability is expected to be ensured.

Cryptocurrency business development under the Financial Instruments and Exchange Act

Regulatory reforms will enable bank subsidiaries to engage in cryptocurrency activities (issuance, trading, brokerage), creating new business opportunities. Specific areas under consideration include the formation and offering of crypto ETFs, brokerage services, and custody services.

However, these are not yet concrete. Challenges such as user protection, volatility management, and system infrastructure development remain, requiring service designs adapted to Japan’s financial practices.

A key issue is how to reconcile Web3’s self-responsibility asset management with Japan’s traditional financial practices. Emphasis is placed on pursuing “optimal solutions for Japanese customers” rather than simply copying overseas models, including reducing the burden of private key management and providing custodial wallets.

Tokenization and on-chain transformation will fundamentally change financial infrastructure

Payment, asset management, and market/securities trading will be transformed through tokenization and on-chain processes. If payments become low-cost, instant, high-frequency, and cross-border, the processing volume will become enormous.

Continuous 24/7 capital aggregation and management, along with large-scale parallel DvP (Delivery versus Payment) settlements, will likely surpass current computing capabilities. These use cases are expected to be the primary application for quantum computing development.

Tokenization of real-world assets (RWA) will dramatically expand investable assets. Interbank markets (interbank lending) will also become faster and more efficient, significantly changing the operational landscape of financial institutions.

However, the timeline depends on the parallel development of foundational infrastructure such as power supply, communication networks, and computing capacity. While it took about 100 years from the invention of electricity to its societal infrastructure, the blockchain era is estimated to unfold over 5 to 10 years.

The keyword for 2026: “Programmability” and the advent of the AI agent era

The key to understanding the financial industry in 2026 is “ultimately, programmability.” The fundamental characteristic of blockchain—programmability—is finally reaching a practical application stage with the emergence of generative AI and quantum computers.

The world where AI agents manage and trade assets on behalf of humans is now “quite close,” with strong consensus. Smartphones will eventually lose their current form, replaced by an era where all financial services are executed through natural language commands to AI agents.

In this context, financial institutions must design “AI-Ready” services. But if everyone adopts AI, service differentiation will disappear. Competitive advantage will then hinge on “insights that only humans can provide.”

Mr. Iso repeatedly emphasizes “Negative Capability”—the ability to remain patient and continue thinking in highly uncertain situations without rushing to conclusions. AI merely aggregates past data and cannot foresee the world three or five years ahead. Financial institutions are required to “keep thinking continuously” amid changing conditions, experimenting through various trials.

The role of banks will fundamentally change

Ten years ago, banks were places where customers visited to fill out forms and stamp seals. That world has vanished. Today, bank functions are transforming, exemplified by integrated stores like Olive and Starbucks collaborations.

In ten years, banking work will change even more dramatically. While the use of AI and cloud infrastructure expands externally, new challenges will arise around security and self-control. SMBC Group is not a fully cloud-native company; it maintains core mainframe systems while adopting a hybrid approach with cloud-based application layers.

Recent advances in MCP (Model Context Protocol) technology enable AI to coordinate between on-premises and cloud environments. We are entering a stage where data management and security adapted to the AI era are pursued simultaneously.

“Thinking continuously while remaining flexible” is the key to surviving the next decade

It is crucial to focus not only on the stablecoin itself but also on the diverse use cases emerging around it and the overall technological innovations supporting them. When areas like decentralized finance, tokenization, RWA, AI agents, and quantum computing come together, a completely new financial ecosystem will emerge.

Negative Capability is not just about “deep contemplation,” but about maintaining an attitude of facing an uncertain future. As AI becomes widespread and answers become easier to obtain, what humans are required to do is to “constantly think about what will happen next.” In an era where stablecoins, Web3, and on-chain processes interact complexly, the role of banks will also undergo dramatic transformation.