In the Web3 era, Japan's three major banks declare a "major shift" in the financial system—preparing for the era of stablecoins, quantum technology, and AI

By 2026, Japan’s financial system is poised to undergo an unprecedented transformation. The three megabanks—SMBC, MUFG, and Mizuho—led by Sumitomo Mitsui Banking Corporation, jointly announced a stablecoin initiative, and with the transition to the Financial Instruments and Exchange Act regulations, crypto asset businesses by bank subsidiaries will be permitted. This is not merely a technological adoption but a movement that fundamentally shakes the roles and revenue structures of banks themselves.

Mr. Hiroo Iso, Group CDIO of Sumitomo Mitsui Financial Group, shares his perspective on this turbulent era. The discussion reveals deep insights into the intertwined technological trends—blockchain, quantum computing, AI agents—and the future of finance.

The Urgency of Losing Monetary Issuance Rights—Background of the Three Megabanks’ Joint Stablecoin Plan

Since 2020, the three megabanks have been conducting overseas case studies and proof-of-concept experiments for their stablecoin plans, which reached a turning point with the 2024 domestic legal framework development and the 2025 enactment of the US GENIUS Act. The Financial Services Agency (FSA) also perceived a crisis from the US developments and took a leading role.

Underlying this is a straightforward but urgent sense of crisis. The market capitalization of dollar-pegged stablecoins has reached 40 trillion yen, making them essential in Bitcoin trading. Institutional investors, including sovereign funds, are now using stablecoins to purchase Bitcoin.

As Bitcoin becomes more widespread in Japan, the absence of a domestic stablecoin means that the dollar-pegged stablecoins will circulate. In other words, Japan risks losing part of its currency issuance sovereignty. Without this sense of crisis, the joint plan of the three megabanks would be hard to understand.

On-Chain Payments Creating 24/7 Capital Circulation

What is the aim of the three megabanks’ joint initiative? Through proof-of-concept experiments at Mitsubishi Corporation, use cases such as Cash Management Systems (CMS) are being explored. The vision is a world where global companies centralize their funds held worldwide, liberated from cut-off times (business hours), enabling efficient 24/7, 365-day operations. This would dramatically enhance the capital efficiency of Japanese companies.

Simultaneously, a point of connection between existing financial systems and decentralized finance (DeFi) is emerging. Seamless integration with the Zengin System and Bank of Japan Net (BOJ Net) could accelerate scale-up opportunities.

The differentiation from JPYC is also clear. JPYC has set a 1 million yen cap and currently faces high hurdles connecting to BOJ Net, whereas the three megabank plan’s main feature is its integration with existing infrastructure. However, it is also suggested that the three megabank plan does not target small transactions, and instead, a coexistence with JPYC could be feasible. Given the success of “Kotorra Remittance,” operated jointly by major domestic banks on a separate system from the Zengin network, a world with multiple stablecoins coexisting is quite plausible.

Crypto Asset Business under the Financial Instruments and Exchange Act—Confusion and Possibilities

The transition of regulations to the Financial Instruments and Exchange Act enables bank subsidiaries to engage in crypto asset businesses, but concrete business models are still in their infancy. While discussions include crypto ETFs, custody, and intermediary services, challenges such as user protection, volatility management, and system development remain unresolved.

The incompatibility between the Web3 self-custody culture and Japan’s traditional financial practices is also a concern. Should users manage private keys themselves, or should financial institutions provide custodial wallets? The question is no longer “because overseas do it this way,” but rather, “what can we offer to Japanese customers?”

Tokenization and On-Chainization Transforming the Three Major Areas of Finance

Beyond discussions on stablecoins and deposit tokens, the tokenization and on-chainization of assets will ripple throughout the entire financial system. Dramatic changes are expected in payments, asset management, and market/securities trading.

Cross-border payments will become low-cost, instant, and high-frequency, with DvP (Delivery versus Payment) settlement operating 24/7/365. The processing volume will reach scales unimaginable with current systems. This raises the critical need for quantum computing.

Mr. Iso points out—“Finance will become the primary use case for quantum computers.” Not only for on-chain activities but also for the exponential increase in computational power, the settlement systems will evolve to a new dimension. He mentions that they are already exploring the implementation potential for financial use cases through visits to quantum computing startups.

As RWA (Real World Assets) tokenization advances, investment scope will expand horizontally. The efficiency and speed of interbank markets will improve, fundamentally changing the work of banks exchanging funds and securities.

The Era of AI Agents—Banks’ Work Will Be “Continuously Thinking”

A key keyword Mr. Iso repeatedly emphasizes when envisioning the future of finance is “programmability.” This characteristic of blockchain, long touted as a benefit, is now becoming more tangible with the advent of generative AI and quantum technology.

The approaching world where AI agents manage asset operations and trading on behalf of humans. Devices like smartphones will evolve into systems where commands are given in natural language to AI. Financial services will follow the same path. To be chosen by customers, banks must design services that are “AI-Ready.”

However, if everyone uses AI, the competitive edge diminishes. That’s why the human element remains the source of a bank’s competitiveness. Mr. Iso emphasizes the importance of “negative capability”—the ability to continue thinking without rushing to conclusions amid uncertainty. This will become the essence of future banking.

“AI cannot predict 3 or 5 years ahead. It’s about continuously pondering how things might unfold as various conditions emerge. That’s what matters.”

Infrastructure Catch-up Timeline—Learning from Edison

Major changes do not occur from a single technological breakthrough. It took 100 years from the invention of the light bulb for electricity to be used in diverse applications. Infrastructure such as power plants and transmission systems was necessary.

If we consider blockchain as an invention akin to electricity, then the supporting infrastructure is gradually catching up. However, the time scale is compressed—rather than 100 years, the transition to a new financial world could occur within 5 to 10 years.

Multiple technological innovations—layer 1 blockchains like Avalanche, quantum technology, optical communication infrastructure—are progressing in parallel. Their synergistic effects will shape the new face of finance.

What Banks Will Bet on in 2026

Ten years ago, bank branches were filled with slips and seals. Now, that scene has disappeared. New branches integrated with Starbucks have appeared, and platforms like “Trunk” for small and medium enterprises are operating dynamically.

What will it look like in 10 years? Mr. Iso does not specify. But the future of banks lies in the ongoing process of thinking amid uncertainty. Stablecoins, DeFi, quantum technology, AI agents—all these elements will come together to create use cases that are currently unimaginable. Recognizing and implementing these developments early will be the true strength of Japanese financial institutions after 2026.