Japan Greenlights First Yen-Pegged Stablecoin This Fall
Japan to Approve First Yen-Backed Stablecoin: Report
Japan’s Financial Services Agency (FSA) is poised to approve the issuance of yen-denominated stablecoins as early as this fall. This marks a significant milestone, making it the first time the country will permit a domestic fiat-pegged digital currency.
Tokyo-based fintech firm JPYC is expected to register as a money transfer business this month and spearhead the rollout, according to a report by The Nihon Keizai Shimbun.
JPYC Stablecoin Details
JPYC is designed to maintain a fixed value of 1 JPY = 1 yen. It's backed by highly liquid assets, including bank deposits and Japanese government bonds. Tokens are issued to digital wallets via bank transfer following purchase applications from individuals or corporations.
This approval arrives as the global stablecoin market, largely dominated by dollar-pegged assets like USDt (USDT) and Circle’s USDC (USDC), exceeds $286 billion. While US dollar stablecoins are already present in Japan, this initiative introduces the country’s first yen-based option.
Impact on Japan’s Bond Market
Okabe, a representative of JPYC, suggested on X (formerly Twitter) that yen stablecoins could significantly influence Japan’s bond market. He drew parallels to the US, where leading stablecoin issuers are major buyers of US Treasurys, holding them as collateral for circulating tokens.
If JPYC achieves widespread adoption, a similar trend in Japan could increase demand for Japanese government bonds (JGBs). Okabe stated, “JPYC will likely start buying up Japanese government bonds in large quantities going forward.”
He also pointed out that countries lagging in stablecoin development may face higher government bond interest rates due to missed opportunities for institutional demand. This is driving governments, including Japan, to expedite stablecoin frameworks to manage monetary policy.
Circle's USDC Launch in Japan
Circle officially launched USDC in Japan on March 26, following regulatory approval for its listing on SBI VC Trade, a crypto exchange operated through a joint venture between SBI Holdings and Circle Japan KK.
The approval, granted on March 4, was the first instance of the country's Financial Services Agency clearing a foreign-issued stablecoin under its regulatory framework.
Circle intends to expand USDC listings to Binance Japan, bitbank, and bitFlyer, some of Japan's largest exchanges.