Japan FSA prepares to approve Yen-backed stablecoin JPYC
The Financial Services Agency (FSA) of Japan is preparing to approve the issuance of yen-backed stablecoins as early as this fall. This will mark the first time the country allows the release of a domestic digital currency pegged to fiat.
The first yen-backed stablecoin will be JPYC. Tokyo-based fintech company JPYC will register as a money transfer business within a month and will lead the rollout process, according to Japanese news outlet The Nihon Keizai Shimbun on Sunday.
JPYC maintains a fixed rate of 1 digital yen = 1 fiat yen, backed by highly liquid assets such as bank deposits and Japanese government bonds. After purchase requests from individuals or corporations, tokens are issued via bank transfers to digital wallets.
FSA’s approval comes as the global stablecoin market — dominated by dollar-pegged assets like USDT — has grown to over $286 billion. While dollar-denominated stablecoins are already established in Japan, this will be the first yen-based offering in the country.
Impact on the bond market
There is speculation that yen stablecoins could reshape Japan’s bond market. In a recent statement, JPYC representative Okabe said that yen stablecoins may have a significant impact on Japanese government bonds (JGBs). He noted that in the U.S., leading stablecoin issuers have become major buyers of Treasury bonds, using them as collateral for circulating tokens.
He suggested that a similar trend in Japan could increase demand for JGBs if JPYC gains widespread adoption.
“JPYC is likely to start buying Japanese government bonds in large volumes in the future,” Okabe said.
He also warned that countries lagging in stablecoin development risk facing higher interest rates on government bonds, as they miss out on this new class of institutional demand. According to him, monetary policy considerations are now pushing governments, including Japan, to accelerate stablecoin development.
As we wrote, Bank of Japan highlights necessity of creating digital yen
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