TLDR
- Japan’s FSA will approve JPYC as the country’s first yen-pegged stablecoin this fall
- JPYC will maintain 1:1 value with Japanese yen, backed by bank deposits and government bonds
- The stablecoin could boost demand for Japanese government bonds if widely adopted
- Tokyo fintech firm JPYC will register as money transfer business to lead the rollout
- Move follows Circle’s USDC launch in Japan earlier this year on major exchanges
Japan’s Financial Services Agency is set to approve the country’s first yen-denominated stablecoin as early as this fall. The move marks a milestone for Japan’s digital finance sector.
Tokyo-based fintech firm JPYC will lead the rollout after registering as a money transfer business. The company plans to complete registration within the month according to reports from The Nihon Keizai Shimbun.
The JPYC token will maintain a fixed 1:1 value with the Japanese yen. It will be backed by highly liquid assets including bank deposits and Japanese government bonds.
Users can purchase tokens through bank transfers to digital wallets. Both individuals and corporations will be able to buy the stablecoin directly.
This represents Japan’s first domestic fiat-pegged digital currency. The country previously only allowed foreign stablecoins like USDC to operate under its regulatory framework.
The global stablecoin market has grown to over $286 billion in value. Dollar-pegged tokens like USDT and USDC currently dominate the space.
US dollar stablecoins already operate in Japan through approved exchanges. However, no yen-based alternative existed until now.
Impact on Japanese Bond Market
JPYC representative Okabe believes the stablecoin could reshape Japan’s bond market. He pointed to how major US stablecoin issuers have become large buyers of Treasury bonds.
These companies hold government bonds as collateral for their circulating tokens. A similar trend in Japan could boost demand for Japanese government bonds.
Okabe stated that JPYC will likely purchase Japanese government bonds in large quantities going forward. This could increase liquidity in the domestic bond market.
Countries that lag in stablecoin development may face higher bond interest rates. They miss out on institutional demand from stablecoin issuers according to Okabe.
Regulatory Progress in Japan
The approval follows Circle’s successful launch of USDC in Japan earlier this year. Circle received FSA approval in March to list on SBI VC Trade exchange.
This marked the first time Japan’s FSA cleared a foreign-issued stablecoin. The approval came after the agency established its regulatory framework for digital assets.
Circle plans to expand USDC listings to other major Japanese exchanges. These include Binance Japan, bitbank, and bitFlyer which process over $25 million daily volume each.
The exchanges attract more than 1.85 million monthly visits combined. This demonstrates the scale of Japan’s crypto trading market.
JPYC’s approval represents the next step in Japan’s digital finance evolution. The domestic yen stablecoin fills a gap left by foreign dollar-pegged tokens.
