Japan’s Regulators Back First Yen-Linked Stablecoin, Reshaping Bond Markets

Japan’s Financial Services Agency (FSA) is set to approve JPYC, the country’s first stablecoin pegged to the Japanese yen, marking a significant development in the nation’s digital finance landscape [1]. The stablecoin, to be issued by Tokyo-based fintech firm JPYC Inc., will be fully convertible to the yen and backed by domestic savings and Japanese government bonds (JGBs). The company’s CEO, Noritaka Okabe, stated that the stablecoin is expected to be launched around autumn 2025 [2]. The regulatory approval aligns with Japan’s updated Payment Services Act, which classifies digital currencies into three categories, including tokens issued by funds transfer firms like JPYC and backed by bank deposits and government bonds [3].

The stablecoin is anticipated to play a pivotal role in enhancing yen liquidity on the blockchain, facilitating faster cross-border transactions and offering a digital alternative to traditional fiat. JPYC plans to issue the stablecoin through bank transfers to digital wallets, ensuring that each token maintains a fixed value of 1 JPY = 1 yen [2]. The token will be issued after individuals or corporations apply and receive the funds via bank transfer. The company has emphasized its commitment to transparency and security, including daily mint/burn records and monthly reserve attestations [4]. Unlike traditional stablecoin models that charge transaction fees, JPYC will generate revenue from the interest earned on its JGB holdings, increasing its profitability as more tokens circulate [1].

Analysts note that the approval of JPYC could reshape Japan’s bond market by increasing demand for JGBs. The CEO of JPYC, Okabe, 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. He emphasized that countries lagging in stablecoin development risk missing out on a new class of institutional demand, potentially affecting government bond yields [2]. The FSA’s decision to approve JPYC reflects a broader global trend, where regulators are increasingly embracing stablecoins to enhance financial infrastructure and liquidity [4].

Japan is not the only country to take regulatory steps in this space. The U.S. has seen the introduction of federal rules for stablecoins, while Singapore, Australia, and the UAE are also developing their own frameworks. In Japan, 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 FSA’s approval is expected to pave the way for more stablecoins, potentially expanding the yen’s role in global digital finance. Given that the yen ranks as the fourth most widely used currency for cross-border payments, according to SWIFT statistics, the impact could be significant [3].

The introduction of JPYC also aligns with Japan’s broader digital finance strategy, which includes exploring blockchain-based payment systems and strengthening its fintech ecosystem. JPYC’s ability to hold and manage JGBs as collateral could create a new revenue stream for the firm and, in turn, provide a more stable funding source for the government. This model is expected to attract institutional investors, hedge funds, and family offices initially, with the potential for broader adoption in the future [1]. 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].

Source:

[1] Japan startup issue 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/)

[4] Best crypto to buy as Japan prepares to launch yen-backed stablecoin (https://coincentral.com/best-crypto-to-buy-as-japan-prepares-to-launch-yen-backed-stablecoin/)