Sumitomo Mitsui Financial Group (SMBC), a Japanese banking and financial services conglomerate, along with business systems firm TIS Inc, Ava Labs — the developer of the Avalanche network — and digital asset infrastructure company Fireblocks, have signed an agreement to explore a framework for commercializing stablecoins in Japan.

Under a Memorandum of Understanding, the companies will focus on developing strategies around issuing and circulating stablecoins pegged to the US dollar and Japanese yen, according to a joint announcement.

Additionally, the collaboration will explore stablecoins as a settlement mechanism for tokenized real-world assets such as stocks, bonds, and real estate.

Stablecoins continue to be a major focus of crypto regulatory frameworks worldwide, and one of the sectors venture capitalists are eyeing in 2025 as nation-states push stablecoins to the forefront of their digital asset strategies.

Stablecoin total market overview. Source: RWA.XYZ

Related: Stablecoins, tokenized assets gain as Trump tariffs loom

Stablecoins become central to US digital asset policy

Speaking at the White House Crypto Summit on March 7, US Treasury Secretary Scott Bessent said that comprehensive stablecoin regulation was central to President Donald Trump’s stated goal to become the worldwide leader in crypto.

Bessent said stablecoins would help protect US dollar hegemony in global markets by expanding the use and scope of the dollar across the world.

Centralized overcollateralized stablecoins rely on short-term US Treasury instruments and fiat money held in banks to back the value of the tokenized real-world assets.

According to Paolo Ardoino, the CEO of stablecoin issuer Tether, the company is now the seventh-largest buyer of US Treasury bills, beating out sovereign countries such as France, Singapore, Belgium, and the United Kingdom.

Stablecoin issuer Tether is now the seventh-largest buyer of US Treasury bills. Source: Paolo Ardoino

Stablecoin issuers like Tether and Circle accumulate the yield from holding US debt instruments as part of their profit from issuing tokenized fiat assets to buyers.

Recently, calls to share stablecoin yield with customers have escalated, with industry leaders like Coinbase CEO Brian Armstrong proposing that stablecoin laws change in the US to allow firms to distribute yield to clients onchain.

US Senator Kirsten Gillibrand disagreed with those proposals and warned against stablecoin issuers sharing yield with clients, arguing that it would displace the banking industry and disrupt home mortgage loans, small business loans, and local bank lending.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom