Japan trust-type SC architecture
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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
| Dimension | Trust type (Progmat Coin) | Bank type (GMO Aozora Net Bank DCJPY) | Funds-transfer-operator type (JPYC) |
|---|---|---|---|
| Legal basis | Payment Services Act, Article 2 , paragraph 9 , “specified trust beneficiary right” | Deposit-type token under the Banking Act | Payment Services Act, Type II funds-transfer business |
| EPI number | 第 3 号 | 第 1 号 (bank issuance) | 第 1 号 (funds-transfer-operator issuance) |
| Issuer | Trust bank (trustee) | Bank | Funds-transfer operator |
| Collateral | 100% segregated management of trust property (cash) | Bank’s own capital + Deposit Insurance Corporation | 100% legal tender held in trust or a performance guarantee |
| Bankruptcy isolation | Legally guaranteed (trust institution) | Up to deposit insurance 1,000 万円 | 100% protection via a performance guarantee |
| Remittance cap | None | Conforms to banking operations generally | 1 times 100 万円 |
| Interest attribution | Attributed to the issuer (as trust-trustee remuneration) | Deposit interest to the depositor | Interest on entrusted assets treated as deposited money |
| Main user | B2B large-lot corporate | Individual retail / Web3 -native | Individual retail / SMEs |
| KYC duality | Dual: consigning bank + trust bank | Bank only | Funds-transfer operator only |
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)
| Segment | 1 位 | Structural reason |
|---|---|---|
| B2B large-lot settlement | Trust type (Progmat) | No remittance cap + three-megabank customer base |
| Retail settlement | Funds-transfer-operator type (JPYC) | Recognition + UX + §501(d) compat (via SBI) |
| Bank-account-linked retail | Bank type (Minna Bank, Solana) | 1:1 linkage to existing accounts |
| Cross-border large-lot | Trust type (Progmat) | Legal strength of the trust |
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