BlackRock yen stablecoin pact with SBI eyes tokenized fund link

The world's largest asset manager is taking a first step into Japan's stablecoin market. A BlackRock yen stablecoin tie-up announced on Oct. 27 will see BlackRock, SBI Holdings and Startale Group study how tokenized money market funds could be connected with JPYSC, a yen-denominated stablecoin issued within the SBI group.

What happened

The parties signed a memorandum of understanding covering three areas, according to SBI and Startale: the technology and infrastructure needed to link tokenized funds with JPYSC, possible business and distribution models, and regulatory questions. BlackRock Financial Management and BlackRock Japan are the BlackRock entities involved. The group said the effort will be open to other financial institutions in Japan and abroad.

It is an exploratory deal. Disruption Banking noted that the release names no specific BlackRock fund, no blockchain and no timetable. BlackRock already runs BUIDL, a tokenized money market fund holding more than $2 billion in Treasuries, repos and cash, though none of the companies has said which fund would be involved.

JPYSC debuted on June 24. SBI Shinsei Trust Bank is the issuer, and SBI VC Trade acts as issuance agent and distributor. Because a trust bank holds the backing assets, it is not subject to the 1 million yen cap on transfers and balances that applies to earlier fund-transfer-type stablecoins. Holders still cannot move it to external wallets until its legal and tax treatment is settled.

Why it matters

The BlackRock yen stablecoin plan fits a wider push to pair tokenized assets with on-chain cash, so that fund shares can be bought, redeemed and used as collateral without leaving the blockchain. Japan's megabanks are testing their own coins, as in the Japan megabank yen stablecoin pilot, and asset managers keep putting funds on-chain, such as Janus Henderson's tokenized Nasdaq-100 fund.

"The shift to onchain finance is becoming an unavoidable global trend," SBI chairman Yoshitaka Kitao said. Startale chief executive Sota Watanabe argued that Japan "must accelerate its efforts" as US rules move toward tokenization.

BlackRock Japan president Yukiko Hashimoto said tokenization can "deliver new value to investors in Japan." The legal base is Japan's Payment Services Act, amended in 2022, which lets only licensed banks, fund transfer agents and trust companies issue stablecoins and requires distributors to register, Disruption Banking noted. Startale, SBI's technical partner on JPYSC, has since become an equity-method affiliate of SBI Holdings. Any tie-up with a BlackRock fund would therefore have to run through that licensed, bank-led setup in Japan.

What's next

No date has been set for completing the review of the BlackRock yen stablecoin link. JPYSC's move to public blockchains, which SBI and Startale have tied to regulatory confirmation, is the milestone to watch. The terms are in SBI's announcement.