Japan FinMin Kato: Will closely monitor JGB market movements, will pursue appropriate debt management

Japan FinMin Kato: Will closely monitor JGB market movements, will pursue appropriate debt management

The Financial Services Agency (FSA) of Japan has approved JPYC, the nation's first yen-backed stablecoin, marking a significant development in the country's digital finance landscape. JPYC Inc., a Tokyo-based fintech firm, will issue the stablecoin, which is fully convertible to the Japanese yen and backed by domestic savings and Japanese government bonds (JGBs) [1].

JPYC Inc. plans to launch the stablecoin via bank transfers to digital wallets in autumn 2025, operating under Japan’s updated Payment Services Act [2]. The stablecoin aims to enhance yen liquidity on blockchain, facilitate faster cross-border transactions, and mirror U.S. stablecoin trends. The regulatory approval aligns with Japan’s broader digital finance strategy, which includes exploring blockchain-based payment systems and strengthening its fintech ecosystem.

The approval of JPYC could reshape Japan’s bond market by increasing demand for JGBs. Noritaka Okabe, CEO of JPYC Inc., highlighted how dollar-backed stablecoins in the United States have become significant buyers of U.S. Treasurys, a trend that could be mirrored in Japan if JPYC gains widespread adoption [2]. The FSA’s decision reflects a broader global trend, where regulators are increasingly embracing stablecoins to enhance financial infrastructure and liquidity.

The introduction of JPYC also aligns with Japan's broader digital finance strategy. Japan's Ministry of Finance (FinMin) has expressed its intention to closely monitor JGB market movements and pursue appropriate debt management strategies. The stablecoin's ability to hold and manage JGBs as collateral could create a new revenue stream for the firm and provide a more stable funding source for the government [3].

As the first regulated yen-backed stablecoin, JPYC is poised to influence not only the domestic market but also the broader Asia-Pacific region, where the yen is a dominant currency in international trade and finance [3]. The approval of JPYC follows the recent launch of Circle’s USDC in March 2025, which marked the first time a foreign-issued stablecoin was permitted under Japan’s regulatory regime [2].

The impact of JPYC on the yen's role in global digital finance is expected to be significant, given that the yen ranks as the fourth most widely used currency for cross-border payments, according to SWIFT statistics [3].

References:
[1] Japan startup issues first yen-pegged stablecoin (https://www.reuters.com/sustainability/boards-policy-regulation/japan-startup-issue-first-yen-pegged-stablecoin-2025-08-19/)
[2] Japan approves first yen-backed stablecoin JPYC (https://cointelegraph.com/news/japan-approves-first-yen-stablecoin-jpyc)
[3] Japanese stablecoin issuer JPYC receives a license (https://www.ledgerinsights.com/japanese-stablecoin-issuer-jpyc-receives-a-license/)