Japan to approve first yen-backed stablecoins this fall

Japan’s Financial Services Agency (FSA) is preparing to approve the issuance of yen-denominated stablecoins as early as this fall, marking the first time the country will allow a domestic fiat-pegged digital currency.

Tokyo-based fintech firm JPYC will register as a money transfer business within the month and will lead the rollout, Japanese news outlet The Nihon Keizai Shimbun reported on Sunday.

JPYC is designed to maintain a fixed value of 1 JPY = 1 yen, backed by highly liquid assets such as bank deposits and Japanese government bonds. After purchase applications from individuals or corporations, the tokens are issued via bank transfer to digital wallets.

The approval comes as the global stablecoin market, dominated by dollar-pegged assets like USDt (USDT) and Circle’s $USDC ($USDC), has expanded to more than $286 billion. While US dollar stablecoins already have a foothold in Japan, this will be the country’s first yen-based offering.

Top stablecoins by market cap. Source: CoinMarketCap

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Yen stablecoins could reshape Japan’s bond market

In a recent post on X, Okabe, a representative of the JPYC issuing company, said yen stablecoins could have a significant effect on Japan’s bond market. He noted that in the US, leading stablecoin issuers have become major buyers of US Treasurys, holding them as collateral for circulating tokens.

A similar trend in Japan, he suggested, could boost demand for Japanese government bonds (JGBs) if JPYC gains widespread adoption. “JPYC will likely start buying up Japanese government bonds in large quantities going forward,” he wrote.

Okabe also noted that countries lagging in stablecoin development risk higher government bond interest rates, as they miss out on a new class of institutional demand. He argued that monetary policy considerations are now driving governments, including Japan, to accelerate stablecoin frameworks.

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Circle launches $USDC in Japan

As reported, Circle officially launched $USDC in Japan on March 26, following regulatory approval for its listing on SBI VC Trade, a crypto exchange operated under a joint venture between SBI Holdings and Circle Japan KK.

The approval, granted on March 4, marked the first time the country’s Financial Services Agency cleared a foreign-issued stablecoin under its regulatory framework.

At the time, Circle said it plans to expand $USDC listings to Binance Japan, bitbank, and bitFlyer, two of which rank among Japan’s largest exchanges, each processing over $25 million in daily volume and drawing more than 1.85 million monthly visits.

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