Japan trust-type SC architecture

Wiki route

This entry sits under fintech index. Read it against Multi-Megabank Consortium Governance for peer / contrast context and Japan Financial Regulation — Legal Framework for Tokens, Crypto Assets, and Payments for the broader system / regulatory boundary.

[!info] TL;DR Japan’s amended Payment Services Act divides SC issuance into three types —— trust type (第 3 号 EPI) / bank type (第 1 号 EPI) / funds-transfer-operator type (第 1 号 EPI) —— each with a different legal basis / strength of bankruptcy isolation / remittance cap. The trust type is the only viable path for B2B large-lot settlement (no remittance cap + 100% bankruptcy isolation via a trust institution), and it is also the legal foundation of Progmat Coin / the three-megabank joint SC. It is structurally advantageous in the §501(d) interoperability scenario, but the cross-border channel remains open.

Comparison of the three-type structure

Structural advantages of the trust type

(a) Strength of bankruptcy isolation: In the trust type, even if the trustee bank fails, the trust property is attributed to the consignor. This is the Japanese version of the USDC model (Circle bankruptcy risk → protected by trustee BNY Mellon), but legal certainty is higher because of the express provisions of the Trust Act.

(b) The disruptive power of having no remittance cap: Funds-transfer-operator types such as JPYC are limited to individual retail by the constraint of 1 times 100 万円. The trust type can handle B2B large-lot settlement (transactions of 10 億円 up to several tens of billions of yen 1 ) —— this is the fundamental reason Progmat chose the trust type.

(c) The meaning of multi-bank joint consignment: In Progmat Coin‘s trust scheme, multiple banks (MUFG, SMFG/SMBC, Mizuho) become joint consignors, and Mitsubishi UFJ Trust 1 社 becomes the trustee. This makes it legally possible to back the customer deposits of 3 megabanks with a single unified joint SC —— the legal foundation of Multi-Megabank Consortium Governance.

Relationship to §501(d)

GENIUS Act §501(d) requires an “interoperable jurisdiction” and a “trustworthy issuer” for cross-border interoperability. The trust type’s legal bankruptcy isolation + regulatory layering has a high affinity with §501(d) certification. However:

• Even for the trust type, the §501(d) tier itself must be obtained separately (it is not automatic)
• Progmat Coin has not established a §501(d) channel → for cross-border use, routing via Project Pax via SWIFT API is currently the mainstream
• If the trust type obtains a §501(d) tier in the future, it may, backed by the legal strength of the trust institution, hold a structural advantage in interoperability with USDC

Market split among the three types (current 2026)

Applications

• In any “trust vs bank issuance” SC design discussion, the structural comparison can be pulled up at once
• As a benchmark framework when comparing the Japan 4 camp in a §501(d) interoperability assessment
• Understanding the pattern of layering a cross-border compliance channel (SWIFT API / IBC) on top of the trust type → Cross-border SC via SWIFT API
• As the Japan-side implementation solution for Institutional Market Stablecoins = Only Bank-Issued Deposit Tokens Are Structurally Viable

Related

• Wiki Index
• Three-Layer Structure of Japan's Stablecoin Regulatory Regime (JPYC, USDC, Project Pax)
• Cross-border SC via SWIFT API
• Multi-Megabank Consortium Governance
• Institutional Market Stablecoins = Only Bank-Issued Deposit Tokens Are Structurally Viable
• GENIUS Act §501 denylist