1. Introduction
Stablecoins have emerged as one of the defining use cases of blockchain technology. Global circulating supply has crossed 250 billion U.S. dollars, with monthly on-chain transfer volumes measured in the trillions. The overwhelming majority of this activity is denominated in U.S. dollars, which makes sense given USD dominance of foreign exchange activity and international settlements. However, this does not explain why on-chain activity denominated in JPY is — in effect — zero, when JPY consistently ranks among the top five foreign currencies traded off-chain (16.85 percent of FX activity as of April 2025, BIS).
The problem resolves to this: which parts of the current on-chain stack (compliance, software, and domestic regulation) are failing to support a flourishing Japan-based stablecoin economy and what must be built or revised to support it?
Japan's 2023 revision of the Payment Services Act, together with subsequent rulemaking by the Financial Services Agency and the enabling work of the trust banking sector, has produced one of the world's clearest regulatory frameworks for stablecoin issuance. Three categories of issuer are now recognised: licensed banks, trust banks acting through the specified trust model, and registered funds-transfer service providers. Each category is paired with specific prudential, custody, and consumer-protection requirements. The result is that a Japanese financial institution wishing to issue a JPY-pegged stablecoin in 2026 can do so with a degree of regulatory certainty that issuers in most jurisdictions still lack.
And yet Japan's JPY stablecoin market remains small and underdeveloped. The first trust bank-backed JPY stablecoins are scheduled to launch in 2026, and existing JPY-pegged tokens hold a tiny fraction of the circulation of their USD-denominated counterparts. This divergence between policy readiness and market outcomes points to missing infrastructure and business models tailored to Japan.
The thesis of this whitepaper is straightforward. Japan needs a Layer 1 blockchain designed specifically for regulated stablecoin payments: a chain whose validator set is onshore and accountable under Japanese law; whose compliance infrastructure is built into the protocol rather than bolted on at great cost to those building at the application layer; whose economic design addresses the structural challenges facing JPY stablecoin issuers; and whose performance characteristics — fast finality, high throughput, low cost — are tuned for everyday retail payments.
MIZUHIKI1 is that chain. It is a public, permissioned, Ethereum-equivalent Layer 1 blockchain, validated onshore in Japan. It offers adjacent, specific tooling for sub-second deterministic finality for payments, a paymaster that allows users to pay transaction fees in compliant stablecoins, a compliance suite anchored in Japan's national identity infrastructure, and a fee mechanism that structurally shares transaction revenue with the stablecoin issuers whose tokens circulate on the network. Taken together, these properties make MIZUHIKI the natural settlement rail for regulated stablecoin activity in Japan, and a credible template for sovereign blockchain infrastructure in other jurisdictions that share Japan's concerns about digital sovereignty and regulatory accountability.
The remainder of this document sets out the architecture, economics, and governance of MIZUHIKI in detail. Section 2 sets the problem the chain is designed to solve; Section 3 sets the principles that have guided its design. Sections 4 through 9 describe the architecture, the paymaster and issuer revenue-sharing mechanism that is the chain's most distinctive feature, the Compliance Suite, the identity layer, the tokenomics of the MIZU token, and the validator network. Sections 10 through 12 set out the roadmap, the chain's positioning within the broader ecosystem, the governance arrangements under which it will operate, and the final conclusion.
Mainnet launch is scheduled for the third quarter of 2026. A public testnet, Awaji, is already live.