Leveraging Yen's Global Liquidity, Japan Launches JPYC to Drive On-Chain Forex Markets

Japan has launched its first yen-backed stablecoin, JPYC, marking a significant step in the nation's push to integrate digital assets into its financial ecosystem. The token, issued by Tokyo-based fintech firm JPYC Inc., is fully redeemable and pegged 1:1 to the Japanese yen, backed by domestic bank deposits and Japanese government bonds (JGBs), distinguishing it from regional peers like South Korea and Taiwan, whose currencies face strict onshore restrictions, according to CoinDesk.

JPYC's launch on October 27, 2025, was accompanied by the introduction of JPYC EX, a dedicated platform for issuing and redeeming the stablecoin under Japan's stringent anti-money laundering regulations, as reported by Cointelegraph. Users can convert yen into JPYC via bank transfers after identity verification using Japan's My Number card, with the company targeting a 10 trillion yen ($65.4 billion) issuance balance within three years, according to TradingView. President Noriyoshi Okabe hailed the stablecoin as a "major milestone in the history of Japanese currency," noting interest from seven companies planning to integrate it into their services, the Cointelegraph report added.

The yen-backed stablecoin's potential lies in its ability to facilitate a USD/JPY market on decentralized platforms, leveraging Japan's status as a global forex hub. The yen is already the third most-traded currency worldwide, involved in 16.85% of daily forex transactions, the CoinDesk article notes. With both the U.S. and Japan now regulating fiat-pegged stablecoins, the pairing of USD and JPYC tokens could create a robust on-chain trading pair, potentially underpinning Asian crypto settlements, the CoinDesk piece adds.

Japan's regulatory clarity has positioned it ahead of other Asian nations. While South Korea and Taiwan impose restrictions limiting their currencies' offshore use, Japan's post-1980s capital control reforms enabled the yen's global liquidity—a critical factor for stablecoin utility. Hong Kong's dollar, though pegged to the U.S. dollar and freely usable offshore, lacks the same onshore-offshore dynamic.

The stablecoin's business model is also distinct. JPYC generates revenue from interest on its JGB holdings rather than charging transaction fees, a strategy made viable by Japan's recent rise in bond yields exceeding 3%, the CoinDesk analysis observes. This contrasts with dollar-backed stablecoins like USDT and USDC, which dominate the $308 billion global stablecoin market but face regulatory scrutiny in some jurisdictions, the Cointelegraph report noted.

JPYC is not alone in Japan's emerging stablecoin landscape. Monex Group announced plans for a yen-pegged stablecoin in August, and three major banks—Mitsubishi UFJ Financial Group, Sumitomo Mitsui Banking Corp., and Mizuho—are collaborating on a joint project via the Progmat platform, according to Coinotag. Meanwhile, JPYC's ambition to become a "new social infrastructure" through blockchain applications aligns with Japan's broader fintech goals, including expanding cashless payments, which now account for 42.8% of transactions, as reported by Yahoo Finance.

Despite its strategic advantages, JPYC faces questions about demand. While the yen's legal clarity and convertibility provide a foundation, global traders may question the need for another fiat-backed token beyond the U.S. dollar. Euro stablecoins, for instance, have struggled to gain traction despite the euro's supranational status, the CoinDesk article observed.