Backpack Launches Yield-Generating Lending in Japan, Eyes Regulated Growth

Backpack, a global crypto wallet and DeFi platform, has entered the Japanese market with a new lending feature that allows users to earn yield on their crypto assets or access liquidity without selling. The feature, called Borrow and Lend, supports major cryptocurrencies such as Bitcoin (BTC), Solana (SOL), and USDC . This marks Backpack's first localized launch of a lending product in Japan, a market known for its strict crypto regulations. The company emphasized that the feature does not include spot or perpetual trading, focusing instead on yield generation and collateralized borrowing.

Japan's crypto users now have the ability to deposit supported assets and immediately lend them out under a seven-day loan term, earning variable returns. Borrowers can also use these assets as collateral to draw liquidity in USDC. Backpack positioned this as a way for long-term holders to access funds while maintaining exposure to their crypto positions . The feature also ties into Backpack's Points rewards program, which is now open to Japanese residents for the first time. This move broadens the platform's localized offerings and reinforces its expansion into Japan.

In addition to yield and borrowing, Backpack noted that the auto-lending model is non-optional and runs automatically once assets are deposited. Withdrawals are restricted during the seven-day loan period, but users can reset the term by adding more of the same asset. The rules apply separately for each sub-account and asset type, with interest accruing continuously unless a withdrawal is pending . The company also warned about the risk of liquidation in borrowing scenarios, where sharp price drops could trigger the sale of collateral to cover loans.

Strategic Expansion Into a Regulated Market

Backpack's decision to launch its Borrow and Lend feature in Japan highlights its confidence in the country's regulatory environment and growing demand for yield-based crypto products. Japan has one of the most developed crypto markets in Asia, with strict compliance frameworks that require platforms to demonstrate robust risk management and transparency . By entering the market with a controlled, phased product rollout, Backpack is aligning with Japan's cautious regulatory approach while addressing user demand for non-speculative tools.

The launch also reflects broader trends in Japan's financial landscape, where rising interest rates and bond yields are reshaping investment strategies. Japanese households hold an estimated $7 trillion in savings, with government bonds (JGBs) seeing increased retail demand due to higher yields. As finance ministry reports indicate, Backpack's lending feature offers another option for capital efficiency in a market increasingly focused on returns.

Risks and Market Outlook

Despite the opportunities, Backpack has emphasized the risks associated with crypto-backed lending. Borrowers face potential liquidation if collateral values fall sharply, and auto-lending rules limit immediate withdrawal access . These factors could deter risk-averse users, particularly in a market like Japan, where regulatory scrutiny often leads to conservative investment behavior. The platform's decision to exclude spot and derivatives trading from the initial launch suggests a measured approach to risk management and regulatory alignment.

Looking ahead, Backpack's entry into Japan may signal further expansion into other regulated markets. The company's focus on localized compliance and yield generation aligns with global trends in crypto finance, where institutional and retail investors seek non-trading utility for their assets. Japan's growing interest in yield-based products, supported by rising bond yields and fintech innovation, could help Backpack establish a foothold and build long-term user trust.

As Japanese households and crypto users continue to explore new ways to generate returns, Backpack's Borrow and Lend feature offers a novel solution that balances accessibility with compliance. The platform's cautious, product-driven approach may serve as a model for other crypto platforms seeking to enter regulated markets in Asia and beyond.