Japan Approves First Yen-Backed Stablecoin This Fall

Japan’s Financial Services Agency (FSA) is set to approve the country’s first yen-backed stablecoin as early as this fall, marking a milestone in Japan’s digital financial transformation [1]. The move, first reported by The Nihon Keizai Shimbun, will be led by Tokyo-based fintech firm JPYC, which plans to register as a money transfer business in the coming month [2]. The stablecoin will maintain a 1:1 peg with the Japanese yen and be backed by highly liquid assets such as bank deposits and Japanese government bonds [3].

The issuance process involves users purchasing the tokens via bank transfers, which will then be stored in digital wallets. This development comes amid a rapidly expanding global stablecoin market, now valued at over $286 billion, where U.S. dollar-pegged assets like USDT and USDC dominate. Although U.S. stablecoins already operate in Japan, this will be the first domestic offering, potentially reshaping the country’s financial landscape [4].

A JPYC representative, Okabe, highlighted the potential impact on Japan’s bond market, noting that major U.S. stablecoin issuers have become significant buyers of U.S. Treasurys, using them as collateral for their tokens [5]. If JPYC gains traction, it could drive increased demand for Japanese government bonds (JGBs), much like the trend observed in the U.S. Okabe also warned that countries slow to adopt stablecoin frameworks risk higher bond yields due to a lack of institutional demand [6].

The approval of JPYC represents a strategic shift in Japan’s regulatory approach. Rather than imposing restrictions, the FSA is adopting a hands-on strategy to foster innovation while maintaining safeguards such as capital requirements, transparency mandates, and clear collateralization rules. This balanced framework is expected to attract more fintech companies and institutional investors to the market [7].

The timing of the approval coincides with broader economic dynamics in Japan, including fluctuating yen performance and evolving monetary policy. The introduction of a yen-backed stablecoin could help stabilize digital transactions and reduce reliance on foreign-currency-based stablecoins. It also aligns with Japan’s goals to strengthen its digital financial infrastructure and support cross-border e-commerce.

Analysts suggest that Japan’s model—combining regulatory clarity with innovation—could serve as a blueprint for other Asian countries looking to integrate stablecoins into their financial systems without compromising stability. This is particularly relevant given the regulatory uncertainty in other major economies, including the U.S.

JPYC Inc. has emphasized that the token will be fully backed by yen deposits, ensuring its stability and transparency. These features are expected to build trust among both retail and institutional users. As the FSA prepares to finalize the approval, stakeholders are keenly observing details such as governance structure and operational oversight.

Japan’s move underscores a growing acceptance of stablecoins within traditional finance. With FSA support, JPYC is poised to play a pivotal role in Japan’s evolving financial ecosystem, offering a regulated, transparent, and efficient means of value transfer.

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[1] title1.............................(https://www.tradingview.com/news/cointelegraph:30aec0997094b:0-japan-to-approve-first-yen-backed-stablecoins-this-fall/)

[2] title2.............................(https://www.chaincatcher.com/en/article/2198120)

[3] title3.............................(https://www.bitget.com/news/detail/12560604916194)

[4] title4.............................(https://x.com/hipnesia/status/1957062216005406970)

[5] title5.............................(https://www.mitrade.com/insights/news/live-news/article-3-1045057-20250816)

[6] title6.............................(https://www.tradingview.com/symbols/DERIBIT-ETHUSD1%21/ideas/?contract=ETHUSD22Q2025&sort=recent&video=yes)