Japanese traditional finance giant Sumitomo Mitsui Financial Group has announced plans to launch a fiat-backed stablecoin on the Avalanche network in collaboration with US-based Ava Labs and blockchain infrastructure firm Fireblocks. The project aims to modernize cross-border payments by reducing reliance on traditional intermediaries like the SWIFT network. Initial trials will focus on intercompany payments and are scheduled for the second half of 2025, with a full-scale launch planned for next year. Ava Labs will lead the blockchain development for the stablecoin infrastructure, while Fireblocks will handle token issuance, security, and management systems with support from Japanese IT firm TIS.
Sumitomo Mitsui Financial Group is the parent company of Japan’s second-largest bank, Sumitomo Mitsui Banking Corporation, managing around $1.7 trillion in assets. The bank has been increasing its involvement in blockchain over the past few years, co-launching the Token Business Lab with HashPort in 2022 to explore enterprise use cases for NFTs, including experiments with non-transferable identity tokens. In 2023, it participated in a pilot with other Japanese banking giants Mitsubishi UFJ and Mizuho focused on stablecoin applications for international settlement. Japan has advanced stablecoin regulations, classifying fiat-backed stablecoins as “Electronic Payment Instruments” in 2022, allowing issuance only by regulated banks and licensed financial entities.
TradFi institutions globally are showing growing interest in stablecoin adoption, with many considering launching their own stablecoins. In the US, there is regulatory momentum building for dollar-pegged tokens, with Bank of America expressing interest in entering the stablecoin market pending regulatory approval. The stablecoin sector has seen significant growth, with a market cap of $234.6 billion, a 56% increase over the past year. Sumitomo Mitsui Banking Corporation’s initiative could position Japan as a leader in institutional stablecoin issuance, highlighting the increasing convergence between traditional banking systems and blockchain infrastructure.
The collaboration between Sumitomo Mitsui Financial Group, Ava Labs, Fireblocks, and TIS to launch a fiat-backed stablecoin on the Avalanche network is a significant development in the digital finance space. The project aims to streamline cross-border payments and reduce reliance on traditional intermediaries like the SWIFT network, potentially revolutionizing the way financial transactions are conducted. With Japan’s advanced stablecoin regulations and the expertise of the partners involved, this initiative has the potential to set a new standard for institutional stablecoin issuance and further integrate blockchain technology into the traditional finance sector.
As traditional financial institutions around the world show increasing interest in stablecoin adoption, the launch of a fiat-backed stablecoin by Sumitomo Mitsui Financial Group on the Avalanche network marks a significant step towards mainstream acceptance of digital assets. With the support of Ava Labs, Fireblocks, and TIS, the project is well-positioned to leverage the latest blockchain technology and regulatory frameworks to create a secure and efficient stablecoin ecosystem. If successful, this initiative could establish Japan as a key player in the global stablecoin market and pave the way for further innovation in the intersection of traditional finance and blockchain infrastructure.
