Japan to Approve First Yen-Backed Stablecoins This Fall

Japan Prepares for First Domestic Stablecoin

Japan’s Financial Services Agency (FSA) is preparing to approve the issuance of yen-denominated stablecoins as early as this fall. This marks the first time Japan will permit a domestic fiat-pegged digital currency.

Tokyo-based fintech firm JPYC will register as a money transfer business within the month and lead the rollout, according to a report from The Nihon Keizai Shimbun.

JPYC is designed to maintain a fixed value of 1 JPY = 1 yen, backed by highly liquid assets such as bank deposits and Japanese government bonds. After purchase applications from individuals or corporations, the tokens are issued via bank transfer to digital wallets.

Yen Stablecoins and the Bond Market

The global stablecoin market has grown to more than $286 billion, largely dominated by dollar-pegged assets like Tether’s USDT and Circle’s USDC. While these already have a presence in Japan, JPYC will be the country’s first yen-based offering.

Okabe, a representative of JPYC’s issuing company, said yen stablecoins could significantly affect Japan’s bond market. In the US, leading stablecoin issuers have become major buyers of Treasurys, holding them as collateral.

He suggested a similar trend in Japan could boost demand for Japanese government bonds if JPYC sees strong adoption. “JPYC will likely start buying up Japanese government bonds in large quantities going forward,” Okabe noted.

Policy and Regulatory Implications

Okabe also warned that countries lagging in stablecoin development risk higher government bond interest rates, as they miss out on this new source of demand. He argued that monetary policy considerations are now accelerating global regulatory efforts, including in Japan.

Circle’s USDC Already Approved in Japan

Earlier this year, Circle officially launched USDC in Japan on March 26 after receiving regulatory approval for its listing on SBI VC Trade, a crypto exchange under SBI Holdings and Circle Japan KK.

The approval, granted on March 4, was the first time Japan’s FSA cleared a foreign-issued stablecoin under its regulatory framework. JPYC’s domestic approval this fall would mark the next major milestone for Japan’s stablecoin market.