Japan to Launch First Domestic Yen-Backed Stablecoin JPYC by Fall 2025

Japan’s Financial Services Agency (FSA) is on track to approve the country’s first yen-backed stablecoin, JPYC, by fall 2025. Issued by Tokyo-based fintech firm JPYC Inc., the stablecoin will be fully collateralized by bank deposits and Japanese government bonds, maintaining a 1:1 peg to the yen. This regulatory green light represents a pivotal moment in Japan’s digital finance evolution, as it moves beyond allowing foreign-issued stablecoins like Circle’s USDC to now supporting a domestic alternative [1].

JPYC will operate under a regulated framework, with the firm already pursuing a money transfer service license—a key requirement set by the FSA. This cautious regulatory approach reflects Japan’s broader strategy to foster innovation while maintaining financial stability, setting a benchmark for other jurisdictions grappling with the challenges of digital asset regulation [2]. Once operational, users will be able to purchase JPYC via bank transfers and store the tokens in digital wallets, offering a transparent and stable medium for both retail and corporate transactions [1].

The introduction of JPYC is expected to have ripple effects in Japan’s government bond market. As stablecoin issuers require high-quality, low-risk assets for collateral, JPYC may become a major buyer of Japanese government bonds (JGBs), increasing institutional demand and potentially influencing bond yields and liquidity [3]. JPYC’s representative, Okabe, has highlighted how similar dynamics have unfolded in the U.S., where stablecoin firms like Tether and Circle hold significant Treasury positions as collateral [1].

This move aligns with Japan’s broader digital finance reforms, including recent adjustments to the Financial Instruments and Exchange Act and tax incentives for crypto transactions. These efforts are designed to attract institutional capital and solidify Japan’s role in the global crypto ecosystem [6]. Notably, Circle, the issuer of USDC, has already invested in JPYC’s Series A funding round, signaling potential integration into global crypto infrastructure and cross-border use cases [5].

The FSA’s approval process is expected to conclude in the coming months, paving the way for JPYC’s official launch. If the stablecoin gains traction, it could enhance the yen’s influence in international digital finance and contribute to a more interconnected global market. However, its long-term success will hinge on adoption rates, institutional uptake, and broader economic conditions [8].