Japan Post Bank plans to launch a digital deposit currency DCJPY in 2026, pegged 1:1 to the yen, targeting securities settlement and government subsidies.

According to the Nikkei News, Japan's largest deposit institution, Japan Post Bank, plans to introduce a Digital Deposit Currency (DC) based on DCJPY in the fiscal year 2026. This currency will be pegged to the yen at a 1:1 ratio, allowing its approximately 120 million account holders to convert their savings into tokens, mainly for security token settlements and local government subsidy distributions. DCJPY is defined by regulators as "Tokenized Deposit," and unlike stablecoins, it operates on a Permissioned Blockchain and is managed by regulated financial institutions. This initiative aims to enhance the efficiency of financial infrastructure, attract younger users, and potentially intensify competition in Japan's fintech industry. Japan is making continuous progress in the regulation of stablecoins and crypto assets.

Japan Post Bank Makes a Major Entry, DCJPY Gains a Huge User Base

Japan Post Bank is planning to introduce a digital deposit currency for its account holders. This initiative will use the DCJPY developed by DeCurret DCP (under the Internet Initiative Japan (IIJ) group) to settle digital securities and other financial products. The bank is also considering using the system for local government subsidy payments. The planned DCJPY system will allow depositors to link a dedicated account to their existing savings accounts and exchange balances at a 1:1 rate with yen. As Japan's largest deposit institution, Japan Post Bank holds approximately 120 million accounts, with total deposits of about $1.36 trillion, creating a huge potential base for the issuance of DCJPY, which could significantly expand the currency's presence in Japan's digital asset ecosystem.

The essence is "tokenization of deposits", which has key differences from stablecoins.

DCJPY represents the "tokenization of deposits" as defined by regulatory authorities. This is different from stablecoins like JPYC, which were recently approved. Stablecoins are typically issued on public blockchains and can be accessed globally, while tokenized deposits are specifically issued on permissioned blockchains managed by regulated financial institutions. This means that DCJPY is more like a digital bank deposit certificate circulating within a restricted, compliant network, rather than a crypto asset aimed at the general public.

Application Scenarios: From securities settlement to government subsidies, aiming at efficiency improvement

Initially, Japan Post Bank intended to mainly use DCJPY for security token settlements. Reports indicate that depositors will be able to instantly convert their savings into DCJPY tokens, which can then be used to purchase tokenized securities with target returns of around 3% to 5%. The bank aims to attract a younger consumer demographic by reducing the settlement time for such transactions from several days to nearly instantaneous. In addition, DeCurret DCP is also negotiating with local governments to use DCJPY for paying subsidies and grants to achieve the digitalization of local operations.

Challenges and Industry Impact: Interoperability Remains a Key Barrier

However, due to regulatory and security considerations, security tokens are currently primarily issued on permissioned Blockchains, making cross-platform Interoperability still a key challenge. Currently, GMO Aozora Net Bank is the only announced DCJPY minting bank, although it has been tested in various proof-of-concept trials. With Japan Post Bank entering the Blockchain-based settlement field, Japan's largest Financial Institution is beginning to embrace distributed ledger technology (DLT) more seriously. Analysts believe that as adoption expands, this may intensify competition in Japan's fintech industry.

Japan's Regulatory Environment Progressing Simultaneously: Approval of Stablecoins and Tax Reform Considerations

Japan's stablecoin regulation will accelerate in 2025, marked by JPYC obtaining Japan's first stablecoin license earlier this year. The Nikkei reported this month that the Financial Services Agency (FSA) plans to approve the first domestically regulated stablecoin denominated in yen issued by Tokyo fintech company JPYC this autumn. Japan is also considering revising its tax system to promote crypto transactions and pave the way for the launch of an official ETF.

Conclusion

Japan Post Bank's embrace of DCJPY marks a milestone in Japan's financial digitalization process. Its vast user base will provide an unprecedented testing ground and application scale for tokenized deposits, greatly promoting the development of the domestic digital asset ecosystem. Focusing on securities settlement and government payments on permissioned chains reflects Japan's cautious approach to seeking a balance between innovation and risk control. However, how to solve the interoperability challenges between different permissioned chains will be key to determining whether it can transition from experimentation to large-scale application. Meanwhile, the approval of stablecoins like JPYC on public chains, alongside the development of DCJPY on permissioned chains, showcases Japan's diversified digital currency strategy of walking on multiple legs, signaling a profound transformation in its fintech prospects.